Question

Carla Vista Company has the following information available for September 2020.

Unit selling price of video game consoles $410
Unit variable costs $328
Total fixed costs $36,900
Units sold 600
1. Compute the unit contribution margin.
2. Prepare a CVP income statement that shows both total and per unit amounts.
3. Compute Carla Vista’ break-even point in units.
4. Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.

Answer 1

Business calculations include computing a unit contribution margin of $82, preparing a CVP income statement with a net income of $12,300, finding the break-even point for Carla Vista Company at 450 units, and preparing a CVP income statement for the break-even point showing a net income of $0.

Step-by-step explanation:

The subject of these questions is the computation and analysis of financial figures within a business or economic context. Student request involves calculations of a company's various financial metrics such as contribution margin, breakeven point, and other cost-volume-profit (CVP) relations. Performing these calculations can be beneficial for making pricing, production, and sales decisions. Below are the calculations for each task, assuming all other things being constant:

Task 1: Compute the Unit Contribution Margin

Contribution margin per unit = Selling price per unit - Variable cost per unit
Contribution margin per unit = $410 - $328 = $82

Task 2: CVP Income Statement

Sales (600 units x $410) = $246,000
Variable Costs (600 units x $328) = $196,800
Contribution Margin = $49,200
Fixed Costs = $36,900
Net Income = $12,300

Task 3: Compute the Break-even Point in Units

Break-even point in units = Total fixed costs / Contribution margin per unit
Break-even point in units = $36,900 / $82 = 450 units

Task 4: CVP Income Statement for the Break-even Point

Sales (450 units x $410) = $184,500
Variable Costs (450 units x $328) = $147,600
Contribution Margin = $36,900
Fixed Costs = $36,900
Net Income at Break-even = $0

Answer 2

Instructions are below.

Step-by-step explanation:

Giving the following information:

Unit selling price of video game consoles $410

Unit variable costs $328

Total fixed costs $36,900

Units sold 600

First, we need to determine the unitary contribution margin:

Unitary contribution margin= 410 - 328= $82

Contribution margin income statement:

Sales= 600*410= 246,000

Total variable cost= 600*328= (196,800)

Total contribution margin= 49,200

Fixed costs= (36,900)

Net operating income= $12,300

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 39,200/82

Break-even point in units= 478 units

Finally, the income statement for the break-even point:

Sales= 478*410= 195,980

Total variable cost= 478*328= (156,784)

Total contribution margin= 39,196

Total fixed costs= (39,200)

Net operating income= (4)