2. Sales Price: $35.00

Planned Unit Sales: 1,000

Variable costs per unit: $22.00

Fixed Costs: $8,500

Calculate contribution margin?

Calculate contribution margin ratio?

Calculate operating profit?

3. Break Even Analysis based on above information.

Break Even Sales, Units?

Breakeven in Sales?

Breakeven sales price?

4. Flexible Budget Vs Actual Budget: Allow for changes in planned sales level and corresponding changes in variable expenses so budget can be adjusted to reflect the actual number of units sold.

Planning Budget: 400 units sold at a cost of $400 per unit. Variable Costs are $100 per unit and fixed costs are $5,000. What is Net operating income?

Actual Budget: 450 units sold at a cost of $400 per unit. All costs remain the same. What is net operating income?

Prepare and income statement for planning vs actual and show the variances. Favorable or Unfavorable? Why is this information important?