Hawk Homes, Inc., makes one type of birdhouse that it sells for $30 each. Its va
ID: 2477516 • Letter: H
Question
Hawk Homes, Inc., makes one type of birdhouse that it sells for $30 each. Its variable cost is $15 per house, and its fixed costs total $13,840 per year. Hawk currently has the capacity to produce up to 2,000 birdhouses per year, so its relevant range is 0 to 2,000 houses.
Prepare a contribution margin income statement for Hawk assuming it sells 1,100 birdhouses this year.
Without any calculations, determine Hawk’s total contribution margin if the company breaks even.
Calculate Hawk’s contribution margin per unit and its contribution margin ratio.
Calculate Hawk’s break-even point in number of units and in sales revenue. (Round your "Unit" and "Sales Revenue" answers to the nearest whole number.)
Suppose Hawk wants to earn $20,000 this year. Determine how many birdhouses it must sell to generate this amount of profit.
Hawk Homes, Inc., makes one type of birdhouse that it sells for $30 each. Its variable cost is $15 per house, and its fixed costs total $13,840 per year. Hawk currently has the capacity to produce up to 2,000 birdhouses per year, so its relevant range is 0 to 2,000 houses.
Explanation / Answer
1)
2)Break even ,profit or loss =0
so total contibution = fixed cost = 13840
3)Contribution margin = 30-15 =15
CM ratio = 15 /30 = .50 or 50%
4)BEP (units )=Fixed cost /Contribution margin
= 13840 / 15
= 923 units
BEP ($) = Fixed cost/CM ratio
= 13840 /.5
= $ 27680
5)Desired sales (units) =[Fixed cost +profit ]contribution margin
= [13840 + 20000 ]/15
= 33840 /15
= 2256 birdhouses
sales (1100 *30) 33000 less:Variable cost (1100*15) (16500) contribution margin 16500 less:fixed cost (13840) net income 2660Related Questions
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