Hawk Homes, Inc., makes one type of birdhouse that it sells for $28.90 each. Its

ID: 2563826 • Letter: H

Question

Hawk Homes, Inc., makes one type of birdhouse that it sells for $28.90 each. Its variable cost is $13.10 per house, and its fixed costs total $13,603.80 per year. Hawk currently has the capacity to produce up to 2,400 birdhouses per year, so its relevant range is 0 to 2,400 houses. :: Required 1. Prepare a contribution margin income statement for Hawk assuming it sells 1,200 birdhouses this year. (Enter your answers rounded to 2 decimal places.) HAWK HOMES, INC Contribution Margin Income Statement Contribution Margin Income from Operations 2. Without any calculations, determine Hawk's total contribution margin if the company breaks even. (Enter your answers rounded to 2 decimal places.) Total Contribution Margin

Explanation / Answer

Ans:1.

HAWK HOMES,INC.

CONTRIBUTION MARGIN INCOME STATEMENT

Sales Revenue(1200*$28.90 each)

$ 34,680.00

Variable cost(1200*$13.10 each)

15720.00

Contributin Margin

18960.00

Fixed costs

$13,603.80

Income from operations

5356.20

Total contribution margin equals to Total fixed costs = $13603.80

At breaks even ,contribution margin = Total Fixed costs

Contribution margin per unit= sales price per unit-variable cost per unit

= $28.90-$13.10=$15.80 per unit

Contribution margin ratio= contribution margin / Sales revenue

= $18960/$34680

= 54.67%

4.Break-even point in number of units and in sales revenue

Break –even units= $13603.80/$15.80

= 861

Break-even in sales revenue= $13603.8/54.67%

= $24883.48