Problem 11-28Determining the break-even point and preparing a contribution margin

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February 12, 2020
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February 12, 2020

Problem 11-28Determining the break-even point and preparing a contribution margin

income statement

Lucent Manufacturing Company makes a product that it sells for $75 per unit. The company incurs variable manufacturing costs of $30 per unit. Variable selling expenses are $9 per unit, annual fixed manufacturing costs are $240,000, and fixed selling and administrative costs are $165,000 per year.

CHECK FIGURE

a.11,250 units

Determine the break-even point in units and dollars using each of the following approaches:

a.Equation method.

b.Contribution margin per unit.

c.Confirm your results by preparing a contribution margin income statement for the breakeven sales volume.

 
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