Rainger Company manufactures DVD players and sells them for $125 each. According to the companys records, the

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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.

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...
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Related Book For  answer-question

Fundamental Managerial Accounting Concepts

ISBN: 978-0078025655

7th edition

Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old

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