Break-even point in dollar sales: It is the value of sales in dollar where a company is neither making profit nor incurring any loss. Contribution Margin Income Statement: A contribution margin income statement separates the variable cost and fixed cost. The variable costs are deducted first from the sales revenue to arrive at contribution margin, from which fixed costs are deducted to determine the net income or loss. To determine : 1. Compute the break-even point in dollar sales for each product. 2. Prepare forecasted financial results for next year following the format of the contribution margin income statement if the sales of each product decline to 33,000 units. 3. Prepare forecasted financial results for next year following the format of the contribution margin income statement if the sales of each product increase to 64,000 units. 4. If sales greatly increase, which product would experience a greater increase in profit? Explain. 5. Describe some factors that might have created the different cost structures for these two products.

Question

Want to see the full answer?

Answer 1

Question

Chapter 21, Problem 5BPSB

To determine

Break-even point in dollar sales:

It is the value of sales in dollar where a company is neither making profit nor incurring any loss.

Contribution Margin Income Statement:

A contribution margin income statement separates the variable cost and fixed cost. The variable costs are deducted first from the sales revenue to arrive at contribution margin, from which fixed costs are deducted to determine the net income or loss.

To determine:

1. Compute the break-even point in dollar sales for each product.

2. Prepare forecasted financial results for next year following the format of the contribution margin income statement if the sales of each product decline to 33,000 units.

3. Prepare forecasted financial results for next year following the format of the contribution margin income statement if the sales of each product increase to 64,000 units.

4.

If sales greatly increase, which product would experience a greater increase in profit? Explain.

5. Describe some factors that might have created the different cost structures for these two products.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Please Solve Question

Covered member’s independence is impaired with respect to an attest client. What is a covered member for a CPA? What are the sources of liability for an auditor who violates the rules of professional conduct in an audit engagement?

Monty Inc., a major retailer of high-end office furniture, operates several stores and is a publicly traded company. The company is currently preparing its statement of cash flows. The comparative statement of financial position and income stetement for Monty as at May 31, 2020, are as The rollowing is additional Informacon soous transectons cunne tie year shoes may sa, coat for Monty ancy which tohows arks. Plant assets costing $69,000 were purchased by paying $47,000 in cash and issuing 5,000 common shares. In order to supplement is casn, Monty Issued ,000 edditone common snares. Cash dividends of $35,000 were declared and paid at the end of the fiscal year create cashflow direct method statement