Blanchard Company manufactures a single product that sells for $180 per unit and

Question

Blanchard Company manufactures a single product that sells for $180 per unit and whose total variable costs are $126 per unit. The company's annual fixed costs are $842,400. (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 $141,000. What amount of sales (in dollars) is needed to break even? Break-Even Point in Dollars Choose Denominator Choose Numerator Break-Even Point in Dollars Break-even point in dollars

Explanation / Answer

Answer to Part 1:

Computation of Break even Point

Fixed Costs

842400

Contribution Margin per Unit (1800-126)

54

Break Even Point in Units

15600

BLANCHARD COMPANY

Contribution Margin Income Statement (at Break Even)

Amount

Percentage of Sales

Sales

15600*180

2808000

Variable Cost

15600*126

1965600

70% (1965600/2808000)

Contribution Margin

842400

30%

(842400/2808000)

Fixed Costs

842400

Operating Profit

0

Answer to Part 2:

Present Fixed Costs

842400

Add: Increase in Fixed Costs

141000

Total fixed Costs (842400+141000)

983400

Contribution Margin Ratio

30%

Sales Needed to breakeven (983400/30%)

3278000

Computation of Break even Point

Fixed Costs

842400

Contribution Margin per Unit (1800-126)

54

Break Even Point in Units

15600

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