Hawk Homes, Incorporated makes one type of birdhouse that it sells for $29.80 each. Its variable cost
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Question:
Hawk Homes, Incorporated makes one type of birdhouse that it sells for $29.80 each. Its variable cost is $14.20 per house, and its fixed costs total $13,494.00 per year. Hawk currently has the capacity to produce up to 2,700 birdhouses per year, so its relevant range is 0 to 2,700 houses.
Required
- Prepare a contribution margin income statement for Hawk assuming it sells 1,190 birdhouses this year.
- Without any calculations, determine Hawk’s total contribution margin if the company breaks even.
- Calculate Hawk’s contribution margin per unit and its contribution margin ratio.
- Calculate Hawk’s break-even point in number of units and in sales revenue.
- Suppose Hawk wants to earn $30,000 this year. Determine how many birdhouses it must sell to generate this amount of profit.
Related Book For
Managerial Accounting
ISBN: 978-0078025518
2nd edition
Authors: Stacey Whitecotton, Robert Libby, Fred Phillips
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