Target Company's most recent contribution format income statement is presented below: Sales.....................................................$75,000 Variable expenses.................................$45,000 Contribution Margin .............................$30,000

Question:

Target Company's most recent contribution format income statement is presented below:

Sales.....................................................$75,000

Variable expenses.................................$45,000

Contribution Margin.............................$30,000

Fixed expenses... ..................................$16,000

Net operating income...........................$14, 000

The company sells its only product for $15per unit. There is no beginning or ending inventories:

1. Compute the company's break-even point in units.

2. Compute the total variable expenses at the break-even point

3. How many units would have to be sold to earn a target profit of $9,000 before taxes?

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...