CONTRIBUTION INCOME STATEMENT Sales Revenue ($10 Per Unit X 5,000 unit sold) $50,000 Less: Variable Costs (Total Variable costs $15,000/5,000 unit sold=$3 per unit) $15,000 Contribution Margin (Sales...

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CONTRIBUTION INCOME STATEMENT Sales Revenue ($10 Per Unit X 5,000 unit sold) $50,000 Less: Variable Costs (Total Variable costs $15,000/5,000 unit sold=$3 per unit) $15,000 Contribution Margin (Sales Revenue-Variable Costs) $35,000 Less: Fixed Costs $15,000 Net Operating Income (Contribution Margin-Fixed Costs) $20,000 CALCULATE CONTRIBUTION MARGIN TO BREAK-EVEN Per unit price $10 Less: Variable Costs ($3 per unit) $3 Contribution Margin (Sales Revenue-Variable Costs) $7 Less: Fixed Costs $15,000 Calculate break even point (Fixed costs/CM per unit) $15,000/$7 2,142.86 CONTRIBUTION INCOME STATEMENT Sales Revenue ($10 Per Unit X 2,142.86 unit sold) $21,428.60 Less: Variable Cost ($3 per unit X 2,142.86 unit sold) $6,428.58 Contribution Margin (Sales Revenue-Variable Costs) $15,000.02 Less: Fixed Costs $15,000 Net Operating Income (Contribution Margin-Fixed Costs) $0.02 CONTRIBUTION INCOME STATEMENT Sales Revenue ($10 Per Unit X 2,143.86 unit sold) $21,438.60 Less: Variable Cost ($3 per unit X 2,143.86 unit sold) $6,431.58 Contribution Margin (Sales Revenue-Variable Costs) $15,007.02 Less: Fixed Costs $15,000 Net Operating Income per unit (Contribution Margin-Fixed Costs) $7.02 PROJECTION CONTRIBUTION INCOME STATEMENT Sales ($10 Per Unit X 6,000 unit sold) $60,000 Less: Variable Cost ($3 per unit X 6,000 unit sold) $18,000 Contribution Margin (Sales Revenue-Variable Costs) $42,000 Less: Fixed Costs $15,000 Net Operating Income (Contribution Margin-Fixed Costs) $27,000 STRATEGIC DECISION MAKING Sales ($10 Per Unit X 6,000 unit sold) $60,000 Less: Variable Cost ($3 per unit X 6,000 unit sold) $18,000 Contribution Margin (Sales Revenue-Variable Costs) $42,000 Less: Fixed Costs Add: $3,000 advertisement cost $15,000 $3,000 Net Operating Income (Contribution Margin-Fixed Costs) $24,000 CM RATIO Sales Price (per unit) $10 Less: Variable Costs ($3 per unit) $3 Contribution Margin (Sales Revenue-Variable Costs) $7 Contribution Margin Ration Or CM Ratio CM Per Unit /Sales Price per unit Calculate break even point (Fixed costs/CM per unit) $15,000/$7 7/10 CM RATIO=0.7% CM RATIO=70% BREAK EVEN POINT SALES Break even sales $ (using break even point in units) Break even units X Sales per unit Break even sales $ (using break even point in units) 2,142.86 units X $ 10=$21,428.60 Break even sales $ (using CM Ration) FC/CM RATIO Break even sales $ (using CM Ration) $15,000/70% or $15,000/0.70 Break even sales $ (using CM Ration) =$21,428.57
Answered Same DayOct 22, 2021

Answer To: CONTRIBUTION INCOME STATEMENT Sales Revenue ($10 Per Unit X 5,000 unit sold) $50,000 Less: Variable...

Nitish Lath answered on Oct 23 2021
128 Votes
MANAGEMENT ACCOUNTING ANALYSIS
INVESTMENT ANALYSIS        2
FROM:
DATE:
SUBJECT: MANAGEMENT ACCOUNTING
ANALYSIS
a. Contribution income statement at 5000 units
CONTRIBUTION INCOME STATEMENT
    Sales Revenue ($10 Per Unit X 5,000 unit sold)
    $50,000
    Less: Variable Costs
(Total Variable costs $15,000/5,000 unit sold=$3 per unit)
    $15,000
    Contribution Margin
(Sales Revenue-Variable Costs)
    $35,000
    Less: Fixed Costs
    $15,000
    Net Operating Income
(Contribution Margin-Fixed Costs)
    $20,000
b. Calculation of break even level:
CALCULATE CONTRIBUTION MARGIN TO BREAK-EVEN
    Per unit price
    $10
    Less: Variable Costs ($3 per unit)
    $3
    Contribution Margin
(Sales Revenue-Variable Costs)
    $7
    Less: Fixed Costs
    $15,000
    Calculate break even point (Fixed costs/CM per unit) $15,000/$7
    2,142.86
c. Contribution margin statement at break even level
CONTRIBUTION INCOME STATEMENT
    Sales Revenue ($10 Per Unit X 2,142.86 unit...
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