My portions are 21-9, c and Exercise 21-12 part 1. Exercise 21-9 Blanchard Compa
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Question
My portions are 21-9, c and Exercise 21-12 part 1.
Exercise 21-9
Blanchard Company manufactures a single product that sells for $180 per unit and whose total variable costs are $135 per unit. The company's annual fixed costs are $562,500. Use this information to compute the company's (a) contribution margin, (b) contribution margin ratio, (c) break-even point in units, and (d) break-even point in dollars of sales.
Exercise 21-11
Blanchard Company manufactures a single product that sells for $180 per unit and whose total variable costs are $135 per unit. The company's annual fixed costs are $562,500.
Prepare a contribution margin income statement for Blanchard Company showing sales, variable costs, and fixed costs at the break-even point.
If the company's fixed costs increase by $135,000, what amount of sales (in dollars) is needed to break even? Explain.
Exercise 21-12
Blanchard Company manufactures a single product that sells for $180 per unit and whose total variable costs are $135 per unit. The company's annual fixed costs are $562,500. Management targets an annual pretax income of $1,012,500. Assume that fixed costs remain at $562,500. Compute the (1) unit sales to earn the target income and (2) dollar sales to earn the target income.
Explanation / Answer
Exercise 21-9
(a) contribution margin: Sales - VC = 180 - 135 = $45
(b) contribution margin ratio: contribution margin per unit / Sales per unit = 45 / 180 = 25.0%
(c) break-even point in units: Fixed cost/ contribution margin per unit = 562,500 / 45 = 12,500
(d) break-even point in dollars of sales: Fixed cost/ contribution margin ratio = 562,500 / 25% = 2,250,000
Exercise 21-12
(a) Units to achieve target: Fixed costs plus pretax income / Contribution margin per unit = 1,575,000 / 45 = 35,000 units
(b) Dollars to achieve target = Fixed costs plus pretax income / Contribution margin ratio = 1,575,000 / 25% = $6,300,000
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