Basic Cost-Volume-Profit Concepts Klamath Company produces a single product. The projected income statement for the coming year is as follows: Sales (55,500 units @ $45.00) Total variable cost Contribution margin Total fixed cost Operating income Required: $2,497,500 949,050 $ 1,548,450 1,671,210 $ (122,760) 1. Compute the unit contribution margin and the units that must be sold to break even. Unit contribution margin % Break-even units units 2. Suppose 10,000 units are sold above breakeven. What is the operating income? 3. Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales revenue. Contribution margin ratio Break-even sales revenue Suppose that revenues are $200,000 more than expected for the coming year. What would the total operating income be?
Basic Cost-Volume-Profit Concepts Klamath Company produces a single product. The projected income statement for the coming year is as follows: Sales (55,500 units @ $45.00) Total variable cost Contribution margin Total fixed cost Operating income Required: $2,497,500 949,050 $ 1,548,450 1,671,210 $ (122,760) 1. Compute the unit contribution margin and the units that must be sold to break even. Unit contribution margin % Break-even units units 2. Suppose 10,000 units are sold above breakeven. What is the operating income? 3. Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales revenue. Contribution margin ratio Break-even sales revenue Suppose that revenues are $200,000 more than expected for the coming year. What would the total operating income be?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Basic Cost-Volume-Profit Concepts
Klamath Company produces a single product. The projected income statement for the coming year is as follows:
Sales (55,500 units @ $45.00)
Total variable cost
Contribution margin
Total fixed cost
Operating income
Required:
1. Compute the unit contribution margin and the units that must be sold to break even.
Unit contribution margin
Break-even units
$2,497,500
949,050
$ 1,548,450
1,671,210
$ (122,760)
units
2. Suppose 10,000 units are sold above breakeven. What is the operating income?
3. Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales revenue.
Contribution margin ratio
Break-even sales revenue
Suppose that revenues are $200,000 more than expected for the coming year. What would the total operating income be?
%
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