Accounting 122 Group Project 2 Cascade Company estimated the following variable

Question

Accounting 122 Group Project 2 Cascade Company estimated the following variable and fixed cost for the only product it produces Variable Cost Per Unit $132.30 $115.30 Fixed Cost $0 $245,000 Direct Materials Direct Labor Factory Overhead Sales Salaries and Commissions Advertising Travel Misc. Selling Expenses Office and Officer Salaries $12.70 $0 $0 $6.70 S0 $6.30 $2.20 $39.500 $24 500 $220,000 $15,000 $17,000 Misc. Administrative Expenses Required 1. Prepare an estimated Contribution Margin Income Statement for the year ended December 31, 2018. (6,000 units are to be produced and sold) Assume the estimated sales price will be $500 per unit. Include one category for variable cost an d one category for fixed cost. 2. Compute the break-even point in units and sales dollars

Explanation / Answer

Total fixed cost is =264000+245000+75000+39500+24500+220000+15000+17000

= $900000

Answer 1)

Contribution Margin Income statement :

Answer 2)

Break even points :

In units = Total Fixed cost /Contribution per unit

= 900000/200

= 4500 units

In dollars = 4500*500 = $2250000

Per Unit For 6000 Units Sales PriceP(A) 500 3000000 Variable Cost : Direct Material 132.30 793800 Direct Labour 115.30 691800 Factory Overhead 24.50 147000 Sales salaries and commission 12.70 76200 Misc. Selling Expense 6.70 40200 Supplies 6.30 37800 Misc. Administrative Exp 2.20 13200 Total Variable cost (B) 300 1800000 Contribution Margin (A-B=C) 200 1200000 Total Fixed Cost (D) 900000 Profit (C-D) $300000

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