Billings Company has the following information available for September 2017
| Unit selling price of video game consoles | $ 400 |
| Unit variable costs | $ 280 |
| Total fixed costs | $54,000 |
| Units sold | 600 |
- Compute the unit contribution margin.
-
Prepare a CVP income statement that shows both total and per unit amounts.
-
Compute Billings’ break-even point in units.
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Prepare a CVP income statement for the break-even point that shows both total and per unit amounts
Darshita Changed status to publish July 29, 2020
Answer:
1)
Unit Contribution Margin
= (Total Revenue – Total Variable Costs)/Total Units
= (($400 x 600) – ($280 x 600))/600
= $120
2)
| Per Unit $ | Total $ | |
| Sales | 400 | 24000 |
| Variable Costs | 280 | 168000 |
| Contribution Margin | 120 | 72000 |
| Fixed Costs | 54000 | |
| Net Operating Income | 18000 |
3)
Break-even point
= Fixed Costs/Contribution Margin per Unit
= $54,000/$120
= 450 units
4)
| Per Unit $ | Total $ | |
| Sales | 400 | 180000 |
| Variable Costs | 280 | 126000 |
| Contribution Margin | 120 | 54000 |
| Fixed Costs | 54000 | |
| Net Operating Income | 0 |
Darshita Changed status to publish July 29, 2020
