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Praveen Co. manufactures and markets a number of rope products. Management is considering the future of...

Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a specialPrepare a contribution margin income statement showing sales, variable costs, and fixed costs for Product XT at the break-eve

Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $170 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $214,200, up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs are $119 per 100 yards of XT rope. Estimate Product XT's break-even point in terms of sales units and sales dollars. (1 unit = 100 yards) (Do not round intermediate calculations.) Contribution Margin per 100 yds. Contribution margin Contribution Margin ratio Choose Numerator: Choose Denominator: = Contribution Margin Ratio Contribution margin ratio / 1(a) Estimate Product XT's break-even point in terms of sales units. (1 unit = 100 yards) Choose Numerator: 1 Choose Denominator: Break-Even Units ! Break-even units = 1(b) Estimate Product XT's break-even point in terms of sales dollars. Choose Numerator: 1 Choose Denominator: Break-Even Dollars Break-even dollars /
Prepare a contribution margin income statement showing sales, variable costs, and fixed costs for Product XT at the break-even point. PRAVEEN CO. Contribution Margin Income Statement (at Break-Even) - Product XT Units $ per unit Total Contribution margin
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ReportAnswer #1
Req 1 Contribution Margin per 100 yds.
Sales                                  170
Less: Variable cost                                  119
Contribution margin                                    51
Contribution Margin ratio
Choose Numerator: / Choose Denominator: = Contribution Margin Ratio
CM per unit / Sales per unit = Contribution margin ratio
                                             51 /                                  170 = 30%
1(a)
Choose Numerator: / Choose Denominator: = Break-Even Units
Fixed costs / Contribution margin per unit = Break-even units
$214,200 /                                    51 = 4200 units
1(b)
Choose Numerator: / Choose Denominator: = Break-Even Dollars
Fixed costs / Contribution margin ratio = Break-even dollars
$214,200 / 30% =                                          714,000
Req 2 PRAVEEN CO.
Contribution Margin Income Statement (at Break-Even) — Product XT
Units $ per unit Total
Sales 4,200 $170       714,000
Less: Variable cost 4,200 119       499,800
Contribution margin 4,200 $51       214,200
Less: Fixed costs       214,200
Net income                 -  
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