Next year, Jefferson Company expects to sell 350,000 units at $19 each. Variable costs are 60 percent

Question:

Next year, Jefferson Company expects to sell 350,000 units at $19 each. Variable costs are 60 percent of sales price. Fixed costs total $874,000.

Required:

1. Calculate the contribution margin per unit.

2. Calculate the break-even point in units.

3. Calculate the break-even sales revenue.

4. Prepare an income statement for Jefferson at break-even.

5. Break-even operations always result in a profit of how much?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...