4-36 Algo Basic Cost-Volume-Profit Concepts

Klamath Company produces a single product. The projected income statement for the coming year is as follows:

Sales (50,200 units @ $44.00)$2,208,800Total variable cost949,784Contribution margin$ 1,259,016Total fixed cost1,359,336Operating income$ (100,320)

Required:

1.Compute the unit contribution margin and the units that must be sold to break even.

Unit contribution margin$Break-even unitsunits

2.Suppose 10,000 units are sold above breakeven. What is the operating income?

$

3.Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales revenue.

Contribution margin ratio%Break-even sales revenue$Suppose that revenues are $200,000 more than expectedfor the coming year.What would the total operating income be?

$