Introduction:
Break-even point in terms of sales units: The break-even point in sales units is the company’s fixed costs divided by the contribution margin of the company. Here, the contribution margin of the company is the selling price less the variable cost.
Break-even point in terms of sales dollars: The break-even point in sales dollars is the company’s fixed costs divided by the contribution margin ratio of the company. Here, the contribution margin of the company is the selling price less the variable cost. And the contribution margin ratio of the company is the contribution margin divided by the selling price.
CVP Chart: CVP chart is the short form of a cost volume profit chart. It shows the relationship between the units produced in a particular period, total cost involved and the sales revenues in that period.
Contribution margin income statement: It is a statement where variable costs are deducted from the sales dollars to get the contribution margin and then all fixed costs are deducted from the contribution margin to get the net
1.
To calculate:
(a) Estimated Break-even point in terms of sales units
(b) Estimated Break-even point in terms of sales dollars
2.
To Prepare:
A CVP chart
3.
To Show:
Contribution margin income statement at break-even point

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Chapter 21 Solutions
WORKING PAPERS F/ FUND ACCOUNTING
- Correct Answerarrow_forwardHarry Company sells 30,000 units at $25 per unit. Variable costs are $20.50 per unit, and fixed costs are $52,000. Determine the following: a. The contribution margin ratio b. The unit contribution margin c. The income from operationsarrow_forwardCorrect answerarrow_forward
- Choose the correct optionarrow_forwardThe following is information concerning a product manufactured by Harper Industries: • Sales price per unit = $80 • Variable cost per unit = $50 Total fixed manufacturing and operating costs (per month) = $500,000 a. The unit contribution margin b. The number of units that must be sold each month to break even c. The number of units that must be sold to earn an operating income of $300,000 per montharrow_forwardQuestionarrow_forward
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