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6-7 Breakeven Income Statement

Revenues needed to breakeven	$1,100
Variable costs ($1,100 * .8)	880
Contribution margin (1,100 * .2)	220
Fixed costs	220
Pretax income	$0

Blacklands, Inc. sells one product for $10. The firm has $60 of fixed costs. Blacklands has variable costs of $4 per unit.

Required: Compute the breakeven point in sales revenue.

Contribution margin (sales revenue variable costs): ________$4_____

Contribution margin ratio (contribution margin/sales revenue): ________60%_____

Breakeven point in sales revenue (fixed costs/contribution margin ratio: ________100_____

Required: Use the data in 6-7 to determine the number of units of inventory Blacklands must sell in order to breakeven. Confirm this result by constructing a breakeven income statement.

Breakeven point in units (fixed costs/contribution margin per sale): _______________

Breakeven Income Statement

Revenues
Variable costs
Contribution margin
Fixed costs
Pretax income