Question

EA5.

LO 3.2Maple Enterprises sells a single product with a selling price of $75 and variable costs per unit of $30. The company’s monthly fixed expenses are $22,500.

What is the company’s break-even point in units?
What is the company’s break-even point in dollars?
Construct a contribution margin income statement for the month of September when they will sell 900 units.
How many units will Maple need to sell in order to reach a target profit of $45,000?
What dollar sales will Maple need in order to reach a target profit of $45,000?
Construct a contribution margin income statement for Maple that reflects $150,000 in sales volume.

Answer 1

The answer for each requirement is given below separatly.

What is the company’s break-even point in units?

Break even = Fixed cost / Contribution

= 22,500/45 (75-30)

= 500 units

What is the company’s break-even point in dollars?

Break even in $ = BE units * sale price

= 500 * 75

=$ 37,500

Construct a contribution margin income statement for the month of September when they will sell 900 units.

Sale (75* 900) $ 67,500

Variable Cost ($ 27,000)

Contribution $ 40,500

Fixed Cost ($ 22,500)

Net Profit $ 18,000

How many units will Maple need to sell in order to reach a target profit of $45,000?

Units need to sell = (45,000 + 22,500)/35 = 1500 units

What dollar sales will Maple need in order to reach a target profit of $45,000?

Sales Needed ($) = 1500 units * 75 sale price = $ 112,500

Construct a contribution margin income statement for Maple that reflects $150,000 in sales volume.

Sale (150000/57 =2000) $ 150,000

Variable Cost (2000* 30) ($ 60,000)

Contribution $ 90,000

Fixed Cost ($ 22,500)

Net Profit $ 67,500

Answer 2

Instructions are listed below

Step-by-step explanation:

Giving the following information:

selling price= $75

variable costs per unit of $30

The monthly fixed expenses are $22,500.

a) Break-even point= fixed costs/ contribution margin

Break-even point= 22,500/(75 - 30)= 500 units

b) Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 22,500/(45/75)= $37,500

c) Contribution margin income statement:

Sales= 75*900= 67,500

Variable cost= 900*30= (27,000)

Contribution margin= 40,500

Fixed costs= (22,500)

Net operating income= 18,000

d) Profit= 45,000

Break-even point= (fixed costs + target profit)/ contribution margin

Break-even point= 67,500/45= 1,500 units

e) Break-even point (dollars)= (fixed costs + target profit)/ contribution margin ratio

Break-even point (dollars)= 67,500/(45/75)= $112,500

f) Contribution margin income statement:

Sales= 150,000

Variable costs= (2,000*30)= (60,000)

Contribution margin= 90,000

Fixed costs= (22,500)

Net operating income= 67,500