Blanchard Company manufactures a single product that sells for $100 per unit and

Question

Blanchard Company manufactures a single product that sells for $100 per unit and whose total variable costs are $76 per unit. The company’s annual fixed costs are $338,400.

(1) Prepare a contribution margin income statement for Blanchard Company at the break-even point.

Sales

Variable costs

Contribution margin

Fixed costs

(2) Assume the company’s fixed costs increase by $126,000. What amount of sales (in dollars) is needed to break even?

Contribution margin ratio

Fixed costs per unit

Selling price per unit

Total fixed costs

Variable costs per unit

BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Amount Percentage of sales %

Sales

Variable costs

Contribution margin

Fixed costs

$

Explanation / Answer

(1)

BLANCHARD COMPANY

Contribution Margin Income Statement (at Break-Even)

(2) Break-Even Point in Dollars

Amount Percentage of sales Sales(14,100 * $100) $1,410,000 100% Variable costs(14,100 * $76) $1,071,600 76% Contribution margin $338,400 24% Fixed costs $338,400 Net income $0

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