2. Sales Price: $35.00

Planned Unit Sales: 1,000

Variable costs per unit: $22.00

Fixed Costs: $8,500

Calculate contribution margin?

$35.00 (Sales Price) - $22.00 (Variable costs per unit) = $13.00

So the contribution margin per unit is $13.00

Calculate contribution margin ratio?

$13.00 (Contribution Margin) / $35.00 (Sales Price) = 0.37 or 37%

So the contribution margin ratio is 37%.

Calculate operating profit?

$35.00 (Sales Price) x 1,000 (Planned Unit Sales) = $35,000 (Revenue)

$22.00 (Variable costs per unit) x 1,000 (Planned Unit Sales) = $22,000 (Variable costs)

$35,000 (Revenue) - $22,000 (Variable costs) - $8,500 (Fixed Costs) = $4,500 (Operating Profit)

So the operating profit is $4,500

3. Break Even Analysis based on above information.

Break Even Sales, Units?

$35.00 (Sales Price) x 654 (Break-even point in units) = $22,890

So the breakeven in sales is $22,890.

Break even in Sales?

How we determined the break even sales is by calculating by multiplying the break-even point in units by the sales price per unit.

Break Even sales price?

$8,500 (Fixed Costs) / 654 (Break-even point in units) = $13.00

So the breakeven sales price is $13.00.

4. Flexible Budget Vs Actual Budget: Allow for changes in planned sales level and corresponding changes in variable expenses so the 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?

$400 (Sales Price) x 400 (Planned Unit Sales) = $160,000 (Revenue)

$100 (Variable costs per unit) x 400 (Planned Unit Sales) = $40,000 (Variable costs)

$160,000 (Revenue) - $40,000 (Variable costs) - $5,000 (Fixed Costs) = $115,000 (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?

$400 (Sales Price) x 450 (Actual Unit Sales) = $180,000 (Revenue)

$100 (Variable costs per unit) x 450 (Actual Unit Sales) = $45,000 (Variable costs)

$180,000 (Revenue) - $45,000 (Variable costs) - $5,000 (Fixed Costs) = $130,000 (Net operating income)

***NEED THIS COMPLETED PLEASE***

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