Question

Rainger Company manufactures DVD players and sells them for $125 each. According to the company’s records, the variable costs, including direct labor and direct materials, are $45. Factory depreciation and other fixed manufacturing costs are $960,000 per year. Rainger pays its sales-people a commission of $20 per unit. Annual fixed selling and administrative costs are $240,000.

Required
Determine the break-even point in units and dollars, using each of the following:
a. Equation method.
b. Contribution margin per unit approach.
c. Contribution margin ratio approach.
d. Confirm your results by preparing a contribution margin income statement for the break-even point sales volume.



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  • CreatedFebruary 07, 2014
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