1/ The controller of Kerrisk Company prepared the following projected income sta

Question

1/ The controller of Kerrisk Company prepared the following projected income statement: Sales (5,000 units @ $15) $75,000 Less: Variable costs 60,000 Contribution margin $15,000 Less: Fixed costs 10,350 Operating income $ 4,650 Required: 1. Calculate the breakeven number of units. 2. Prepare an income statement at breakeven. 3. How many units must Kerrisk sell to earn operating income equal to $9,900? 4. What is the contribution margin per unit? What is the CM ratio? 5. What is the variable cost ratio? 6. Calculate the breakeven revenue. 7. How much revenue must Kerrisk make to earn operating income of $9,900? 8. How many units must Kerrisk sell to earn operating income equal to 15% of revenue?

Explanation / Answer

=10.30 / (15-12)=3450

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Varbales costs =3450 x12= 41400

Contribution margin= 10350

Fixed xcost =10350

Operating income =zero

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Units= 9900+10350   / 15-12 =20250/3= 6750

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