Basic Cost-Volume-Profit Concepts

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

Sales (52,800 units @ $45.00)	$2,376,000
Total variable cost	1,021,680
Contribution margin	$ 1,354,320
Total fixed cost	1,462,050
Operating income	$ (107,730)

Required:

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

Unit contribution margin	$
Break-even units	units

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 expected for the coming year. What would the total operating income be? $