Naismith Company produces a single product. The projected income statement for the coming year is as follows:

Question:

Naismith Company produces a single product. The projected income statement for the coming year is as follows:
Sales (53,000 units @ $36) ........ $1,908,000
Total variable cost ........... 1,030,320
........... $ 877,680
Total fixed cost ............ 898,380
Operating income ........... $ (20,700)

Required:
1. Compute the unit and the units that must be sold to break even.
2. Suppose 10,000 units are sold above breakeven. What is the operating income?
3. Compute the ratio and the break-even point in sales revenue. Suppose that revenues are $200,000 more than expected for the coming year. What would the total operating income be?
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...