Victoria Company produces a single product Last years income statement is as follows Sales (29,000 units) $1,218,000 Total variable cost 812,000 Contribution margin $ 406,000 Total fixed cost 300,000 Operating income $ 106,000 Required 1 Compute the break even point in units and sales dollars 2 Wha...

1 Breakeven units 30000014 21429 406000 29000 14 Breakeven in sales dollars 21429 42 900018 OR 3000 ...

Victoria Company produces a single product. Last years income statement is as follows: Sales (29,000 units) ...........$1,218,000

Question:

Victoria Company produces a single product. Last year’s income statement is as follows:
Sales (29,000 units) ...........$1,218,000
Total variable cost ............. 812,000
............$ 406,000
Total fixed cost ............. 300,000
Operating income ............$ 106,000

Required:
1. Compute the break-even point in units and sales dollars.
2. What was the margin of safety for Victoria last year?
3. Suppose that Victoria is considering an investment in new technology that will increase fixed cost by $250,000 per year but will lower variable costs to 45 percent of sales. Units sold will remain unchanged. Prepare a budgeted income statement assuming that Victoria makes this investment. What is the new break-even point in units and sales dollars, assuming that the investment is made? 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...