Determining the break-even point and preparing a contribution margin income statement Nickolas Company manufactures radio and cassette
Question:
Determining the break-even point and preparing a contribution margin income statement Nickolas Company manufactures radio and cassette players and sells them for $100 each. According to the company’s records, the variable costs, including direct labor and direct materials, are $50. Factory depreciation and other fixed manufacturing costs are $192,000 per year. Nickolas pays its salespeople a commission of $18 per unit. Annual fixed selling and administrative costs are $128,000.
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 breakeven point sales volume.
Contribution MarginContribution 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...
Step by Step Answer:
Fundamental Managerial Accounting Concepts
ISBN: 978-0078110894
6th Edition
Authors: Edmonds, Tsay, olds