The following is information concerning a product manufactured by Ames Brothers.

Question

The following is information concerning a product manufactured by Ames Brothers. Sales price per unit $ 72 Variable cost per unit 43 Total fixed manufacturing and operating costs (per month) 410,000 a. Determine the unit contribution margin. b. Determine the number of units that must be sold each month to break even. (Round your answer to the nearest whole number.) c. Determine the number of units that must be sold to earn an operating income of $234,000 per month. (Round your answer to the nearest whole number.)

Explanation / Answer

a.contribution margin=Sales-Variable costs

=(72-43)=$29/unit

b.Breakeven units=fixed costs/contribution margin

=(410,000/29)=14138 units(Approx)

c.Target contribution margin=fixed costs+Target operating income

=(410,000+234000)=$644000

Hence units sold=(644000/29)=22207 units(Approx)

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