Assume that you are part of the accounting team for Murrin Computing. The company currently expects to sell 650 units for total revenue of $20,250 each month. Murrin Computing estimates direct materials costs of $3,150, direct labor costs of $4,200, variable overhead costs of $2,100, and variable selling and administrative costs of $1,050. Fixed costs of $6,750 are also expected, which includes .l.. fixed overhead and selling and administrative costs. Using this information, complete the contribution margin income statement shown below. Murrin Computing Contribution Margin Income Statement $ 20.250 Sales Less: Variable costs -10,500 Contribution margin 17.100 X Less: Fixed costs 6,750 3.000 Operating income Feedback first determine the break-even point in units. First, calculate the contribution margin (CM) per unit (rounded to the Murrin Computing is examining cost behavior patterns. Your recommendation is nearest dollar). 500 X Next, complete the formula below to determine the break-even units. Total Fixed Costs / Contribution Margin per Unit - Units 26.30 X 650 X units 6,750 APPLY THE CONCEPTS: Effect of Changes to Sales Price, Variable Costs and Fixed Costs Now consider each of the following scenarios for Murrin Computing. Calculate the contribution margin (CM) per unit, rounded to nearest dollar, and the new break-even point in units, rounded to the nearest whole unit, for each scenario separately. Scenario 2 Scenario 3 Scenario 1 After some extensive market research, Murrin has Murrin will dispose of a Murrin has been experiencing quality problems with a determined that a sales price increase of $2 per machine in the factory. The materials supplier. Changing suppliers will improve the unit will not affect the sales volume and will be effective immediately. depreciation on that equipment quality of the product but will cause direct materials costs to increase by $1 per unit. is $500 per month. 26.30 X CM per unit: $ CM per unit: $ CM per unit: Break-even units: Break-even units: 204 X units Break-even units: units units