Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense).

Required:

1. Calculate the break-even pairs of shoes. $fill in the blank 82dc1cf81fdefc5_1

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At the break-even point, operating income equals $0. The break-even point tells managers how many units must be sold to cover all costs. Once more than the break-even units are sold, the company begins to earn a profit. So to get the break-even units using the operating income statement, we set operating income to zero, and then solve for the number of units.

Break-Even Units	=	Total Fixed Cost
		(Price Variable cost per unit)

Review the "How to Calculate the Break-Even Point in Units" example in your text.

2. Check your answer by preparing a contribution margin income statement based on the break-even units. Enter all amounts as a positive number.

Chillmax Company Contribution Margin Income Statement At Break-Even Point

	Total
Sales
Total variable cost
Total contribution margin
Total fixed cost
Operating income