Problem 21-2A Cost behavior estimation LO P1 Alden Co.s monthly unit sales and total cost data for its operating activities of the past year follow. Management wants to use these data to predict future fixed and variable costs.

Month	Units Sold					Total Cost				Month		Units Sold					Total Cost
1			315,500			$	153,000			7				364,500				$	311,084
2			160,500				96,750			8				265,500					147,250
3			260,500				201,100			9				76,900					69,500
4			200,500				95,500			10				145,500					126,125
5			285,500				197,000			11				89,500					89,500
6			185,500				107,500			12				95,500					86,150

Pt1. Predict future total costs when sales volume is (a) 371,000 units and (b) 411,000 units.

	Predictions
Sales (units)	371,000	411,000
Fixed costs
Variable costs
Total	$0	$0

Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next years plans call for a $180 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $154,800, up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs are $144 per 100 yards of XT rope.

Pt2. Estimate Product XTs break-even point in terms of sales units and sales dollars. (1 unit = 100 yards) (Do not round intermediate calculations.)

Contribution Margin			per 100 yds.
	Contribution margin		$0
Contribution Margin ratio
	Choose Numerator:	/	Choose Denominator:	=	Contribution Margin Ratio
		/		=	Contribution margin ratio
					0
1(a) Estimate Product XTs break-even point in terms of sales units. (1 unit = 100 yards)
	Choose Numerator:	/	Choose Denominator:	=	Break-Even Units
		/		=	Break-even units
					0
1(b) Estimate Product XTs break-even point in terms of sales dollars.
	Choose Numerator:	/	Choose Denominator:	=	Break-Even Dollars
		/		=	Break-even dollars
					0

Pt3. Prepare a contribution margin income statement showing sales, variable costs, and fixed costs for Product XT at the break-even point.

PRAVEEN CO.
Contribution Margin Income Statement (at Break-Even) Product XT
		Units	$ per unit	Total
	Contribution margin