Question
A contribution margin income statement organizes costs by behavior (variable or fixed), rather than by function (operating, selling, or administrative). The contribution margin is the
A contribution margin income statement organizes costs by behavior (variable or fixed), rather than by function (operating, selling, or administrative). The contribution margin is the difference between sales and
gross profitvariable expensesfixed expensesoperating incomevariable expenses
.
Byron Manufacturing has one product that sells for $24.00 per unit. The company estimates fixed costs at $6,000, direct materials at $4.00 per unit, direct labor at $5.00 per unit, and variable overhead costs at $3.00 per unit.
Fill in the contribution margin income statement when 730 units are sold:
Byron Manufacturing Contribution Margin Income Statement | |
---|---|
Sales | |
Less: Variable costsFixed costsVariable costs | |
Contribution margin | |
Less: Variable costsFixed costsFixed costs | |
Operating income |
Calculate Byron Manufacturing's per unit contribution margin :
.
Calculating the Break-even Point:
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