Edge Equipment Co. manufactures and markets a number of rope products. Managemen

Question

Edge Equipment Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next yeas plans call for a $220 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $413,600, up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs are $132 per 100 yards of XT rope. Prepare a contribution margin income statement showing sales, variable costs, and fixed costs for Product XT at the break-even point

Explanation / Answer

Sales

1,034,000

Variable costs

620,400

Contribution margin

413,600

Fixed costs

413,600

Net income

0

(The break even point is 4700 units)

Sales

1,034,000

Variable costs

620,400

Contribution margin

413,600

Fixed costs

413,600

Net income

0

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