Question
Hawk Homes, Inc., makes one type of birdhouse that it sells for $30.50 each. Its variable cost is $14.40 per house, and its fixed costs
Hawk Homes, Inc., makes one type of birdhouse that it sells for $30.50 each. Its variable cost is $14.40 per house, and its fixed costs total $13,862.10 per year. Hawk currently has the capacity to produce up to 2,000 birdhouses per year, so its relevant range is 0 to 2,000 houses.
1. Prepare a contribution margin income statement for Hawk assuming it sells 1,190 birdhouses this year. (Enter your answers rounded to 2 decimal places.)
2. Without any calculations, determine Hawks total contribution margin if the company breaks even. (Enter your answers rounded to 2 decimal places.)
3. Calculate Hawks contribution margin per unit and its contribution margin ratio. (Round your answers to 2 decimal places. (i.e. .1234 should be entered as 12.34%.))
4. Calculate Hawks break-even point in number of units and in sales revenue. (Round your "Sales Revenue" answer to 2 decimal places and "Unit" answer to the nearest whole number.)
5. Suppose Hawk wants to earn $28,000 this year. Determine how many birdhouses it must sell to generate this amount of profit. (Round up to the next whole number.)
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