Question

Break-Even Point in Units

Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense).

Required:

1. Calculate the sales revenue that Chillmax must make to break even by using the break-even point in sales equation. $

2. Prepare a contribution margin income statement based on the break-even point in sales dollars. Enter all amount as a positive number.

Break-Even Point in Units Chillmax Company plans to sell 3,500 pairs of shoes at S60 each in the coming year. variable cost is 3S96 of the sales price; contribution margin is 6s% of the sales price. Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the sales revenue that Chillmax must make to break even by using the break-even point in sales equation. 2. Prepare a contribution margin income statement based on the break-even point in sales dollars. Enter all amount as a positive number. Chillmax Company Contribution Margin Income Statement At Break-Even Point Total Sales Total variable cost Total contribution margin Total fxed cost Operating income Check My Work Previous Next

Answer 1

1) Break even sales

Break even sales = Total variable expense+Total fixed cost

X = 0.35X+78000

0.65X = 78000

X(Break even sales) = 120000

2) Contribution margin income statment :

Sales	120000
Variable cost	42000
Contribution margin	78000
Fixed cost	78000
Operating income	0