Lucent Manufacturing Company makes a product that it sells for $75 per unit. The company incurs variable
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Lucent Manufacturing Company makes a product that it sells for $75 per unit. The company incurs variable manufacturing costs of $30 per unit. Variable selling expenses are $9 per unit, annual fixed manufacturing costs are $240,000, and fixed selling and administrative costs are $165,000 per year.
Required
Determine the break-even point in units and dollars using each of the following approaches:
a. Equation method.
b. Contribution margin per unit.
c. Contribution margin ratio.
d. Confirm your results by preparing a Contribution margin income statement for the breakeven sales volume.
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...
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Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-0078025655
7th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old
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