Ritchie Manufacturing Company makes a product that it sells for $150 per unit. The company Incurs variable manufacturing costs of $60 per unit. Variable selling expenses are $18 per unit, annual fixed manufacturing costs are $480,000, and fixed selling and administrative costs are $240,000 per year.
Required
Determine the break-even point in units and dollars using each of the following approaches:
a. Use the equation method.
b. Use the contribution margin per unit approach
c. Use the contribution margin ratio approach.
d. Confirm your results by preparing a contribution margin income statement for the break-even sales volume.