Cardinal Castles, Inc., makes one type of birdhouse that it sells for \($30\) each. Its variable cost is \($14\) per house, and its fixed costs total \($13,840\) per year. Cardinal currently has the capacity to produce up to 2,000 birdhouses per year, so its relevant range is zero to 2,000 houses.

Required:
1. Prepare a contribution margin income statement for Cardinal assuming it sells 1,100 bird¬ houses this year.
2. Without any calculations, determine Cardinal’s total contribution margin if the company breaks even.
3. Calculate Cardinal’s contribution margin per unit and its contribution margin ratio.
4. Calculate Cardinal’s break-even point in number of units and in sales dollars.
5. Suppose Cardinal wants to earn \($20,000\) this year. Determine how many birdhouses it must sell to generate this amount of profit. Is this possible?
6. Prepare a cost-volume-profit graph for Cardinal including lines for both total cost and sales revenue. Clearly identify fixed cost and the break-even point on your graph.