Exercise 18-11 Income reporting and break-even analysis LO C2 Blanchard Company

Question

Exercise 18-11 Income reporting and break-even analysis LO C2 Blanchard Company manufactures a single product that sells for $145 per unit and whose total variable costs are $87 per unit. The company's annual fixed costs are $916,400 (1) Prepare a contribution margin income statement for Blanchard Company at the break-even point BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Percentage of sales Amount 0% (2) Assume the company's fixed costs increase by $143,000. What amount of sales (in dollars) is needed to break even? Break-Even Point in Dollars Choose Numerator: Choose Denominator: Break-Even Point in Dollars Break-even point in dollars

Explanation / Answer

18-11) Break even point = FIxed cost/contribution margin per unit

                                    = 916400/(145-87)

Break even point = 15800 Unit

Prepare contribution margin income statement at break even point :

2) Break even point in dollars if fixed cost increase by $143000

Amount % of sales Sales 2291000 100% Variable cost (1374600) 60% Contribution margin 916400 40% Fixed cost (916400) Net income 0

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