Question

E18-13 Billings Company has the following information available for September 2017. Unit selling price of video game consoles Unit variable costs Total fixed costs Units sold $ 400 $ 280 $54,000 600 Instructions (a) Compute the unit contribution margin. (b) Prepare a CVP income statement that shows both total and per unit amounts. (c) Compute Billings' break-even point in units. (d) Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.

Answer 1

A) Unit Contribution Margin

Unit Sales - Variable Costs

$400 - $280 = $120

B)

	Per Unit($600)	Total
Sales Price	$400	$240,000
Variable Cost	$280	$168,000
Contribution Margin	$120	$72,000
Fixed Cost		$54,000
Net Operating Income	$30	$18,000

C) Break- even point in units

$54,000/120 =450 Units

D)

	Per Unit	Total
Sales Price	$400	$180,000
Variable Cost	$280	$126,000
Contribution Margin	$120	$54,000
Fixed Cost		$54,000
Net Operating Income	0	0