Blanchard Company manufactures a single product that sells for S240 per unit and
ID: 390558 • Letter: B
Question
Blanchard Company manufactures a single product that sells for S240 per unit and whose total variable costs are $180 per unit. The company's annual fixed costs are $954,000. (1) Prepare a contribution margin income statement for Blanchard Company at the breakeven point. BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Percentage of sales Amount (2) Assume the company's fixed costs increase by S144,000. What amount of sales (in dollars) is needed to break even? Break-Even Point in Dollars Break-Even Point in Dollars Break-even point in dollars Choose Numerator: Choose Denominator =Explanation / Answer
1) Selling price = 240 $ per unit
Variable costs = 180 $ per unit
Annual fixed cost = 954000 $
Breakeven point = FC/(Selling price – Variable cost)
= 954000/(240-180)
= 15900 units
Contribution margin income statement at breakeven sales
Sales
15900*240= 3816000
Less Variable cost
15900*180= 2862000
Contribution Margin
954000
Fixed cost
954000
Net operating income
0
2) Fixed cost = 954000 + 144000 = 1098000 $
Break-even in dollars = (FC/ (Selling price – Variable cost)) *Selling price
= 1098000/60 = 18300 units*240 = 4392000 $
Sales
15900*240= 3816000
Less Variable cost
15900*180= 2862000
Contribution Margin
954000
Fixed cost
954000
Net operating income
0
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