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EXERCISE 4 The income statement for Hyland Company for 2019 appears below HYLAND COMPANY Income Statement for the Year Ended December 31, 2019 Sales revenue
EXERCISE 4 The income statement for Hyland Company for 2019 appears below HYLAND COMPANY Income Statement for the Year Ended December 31, 2019 Sales revenue 40,000 units)......... Variable expenses Contribution margin. Fixed expenses. Net income (loss)....... Instructions $1,000,000 700.000 300.000 345.000 $ 45.000 Answer the following independent questions and show computations using the contribution margin technique to support your answers: 1. What was the company's break-even point in sales dollars in 2019 2. How many additional units would the company have to sell in 2020 (compared to 2019) in order to earn net income of $45,000? 3. If the company is able to reduce variable costs by $4.50 per unit in 2020 and other costs and unit revenues remain unchanged, how many units will the company have to sell in order to earn a net income of $45,000 Solution 4 1. Total sales needed total units to be sold Note: Required sales in units can be obtained directly by dividing fixed costs plus profit by contribution margin per unit: 3. 2019 Variable cost per unit = Variable cost reduction = 2020 Variable cost per unit Expected contribution margin $ units
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