Question

mtbCompary whatags we team logo. W hasted costs of $300,000 year phnw tie costs of$400 per fag Each tag sels for$1a“ Read te reoureents Requirement 1. Use the equation approach to compule the number of lags Wbb must sel each yearto break even The number of ags Wabb must sell each year to beave MacBook A cops lock 呬 control optioncommand commandoption

Answer 1

Solution 1:

Net Sales revenue - Variable cost - Fixed cost = Target Profit

At break even units target profit is 0.

Let break even units are X

$10X - $4X - $300,000 = 0

X = 50000 units

Solution 2:

Target profit = $6,000

CM Ratio = $6 / $10 = 60%

Target sales to earn target profit = (Fixed cost + Target profit) / CM Ratio

= ($300,000 / $6,000) / 60% = $510,000

Solution 3:

Contribution margin income statement
For year ended December 31, 2018
Particulars	Amount
Sales (41000*$10)	$410,000.00
Variable cost (41000*$4)	$164,000.00
Contribution margin	$246,000.00
Fixed costs	$300,000.00
Net Operating income	-$54,000.00