A manufacturing company produces a product with variable costs of $30/unit, fixed costs of $100,000, and a selling price of $50/unit. The company expects to sell 8,000 units.

• Requirements:
  • Calculate the contribution margin per unit and total contribution margin.
  • Prepare a variable costing income statement.
  • Determine the break-even point in units and sales dollars.
  • Analyze the impact of a 10% increase in variable costs on profitability.
  • Discuss the advantages of variable costing in decision-making compared to absorption costing.