Hawk Homes, Inc., makes one type of birdhouse that it sells for $29.40 each. Its variable cost is $13.10 per house, and its fixed costs total $13,952.80 per year. Hawk currently has the capacity to produce up to 2,200 birdhouses per year, so its relevant range is 0 to 2,200 houses.

Required: 1. Prepare a contribution margin income statement for Hawk assuming it sells 1,200 birdhouses this year.

HAWK HOMES, INC.
Contribution Margin Income Statement
Variable Costs
Contribution Margin
Income from Operations

2. Without any calculations, determine Hawks total contribution margin if the company breaks even.

3. Calculate Hawks contribution margin per unit and its contribution margin ratio.

Unit Contribution Margin
Contribution Margin Ratio		%

4. Calculate Hawks break-even point in number of units and in sales revenue.3. Calculate Hawks contribution margin per unit and its contribution margin ratio.

Break-Even Units		Units
Break-Even Sales Revenue

5. Suppose Hawk wants to earn $26,000 this year. Determine how many birdhouses it must sell to generate this amount of profit.

Target Unit Sales

Units