E6-5 (Algo) Calculating Contribution Margin and Contribution Margin Ratio; Identifying Break-Even Point, Target Profit [LO 6-1, 6-2]

Sandy Bank, Inc., makes one model of wooden canoe. Partial information is given below.

Required:

1. Complete the following table.

2. Suppose Sandy Bank sells its canoes for $540 each. Calculate the contribution margin per canoe and the contribution margin ratio.

3. This year Sandy Bank expects to sell 780 canoes. Prepare a contribution margin income statement for the company.

4. Calculate Sandy Banks break-even point in units and in sales dollars.

5. Suppose Sandy Bank wants to earn $80,000 profit this year. Calculate the number of canoes that must be sold to achieve this target.

Complete this question by entering your answers in the tabs below.

• Required 1

Complete the following table. (Round your "Cost per Unit" answers to 2 decimal places.)

Number of Canoes Produced and Sold	460	620	720
Total costs
Variable Costs	$69,460
Fixed Costs	156,400
Total Costs	$225,860	$0	$0
Cost per Unit
Variable Cost per Unit
Fixed Cost per Unit
Total Cost per Unit	$0.00	$0.00	$0.00

• Required 2

Suppose Sandy Bank sells its canoes for $540 each. Calculate the contribution margin per canoe and the contribution margin ratio. (Round your intermediate calculations and final answers to 2 decimal places. Round your "percentage" answer to 2 decimal places. (i.e. .1234 should be entered as 12.34%.))

Unit Contribution Margin		per Canoe
Contribution Margin Ratio		%

• Required 3

This year Sandy Bank expects to sell 780 canoes. Prepare a contribution margin income statement for the company. (Round your intermediate calculations to 2 decimal places.)

SANDY BANK, Inc.
Contribution Margin Income Statement
For the Current Year
Contribution Margin
Income from Operations

Required 4

Calculate Sandy Banks break-even point in units and in sales dollars. (Round final answers to the nearest whole number.)

Break-Even Units		Canoes
Break-Even Sales Revenue

Required 5

Suppose Sandy Bank wants to earn $80,000 profit this year. Calculate the number of canoes that must be sold to achieve this target. (Round Unit Contribution Margin to 2 decimal places. Round your answer to the next whole number.)

Target Sales Units

Canoes