Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $200 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $270,000, up to a maximum capacity of 700,000 yards of rope. Forecasted variable costs are $140 per 100 yards of XT rope. Required 1. Estimate Product XT's break-even point in terms of (a) sales units and (6) sales dollars. Check (1a) Break-even sales, 4,500 units 2. Prepare a contribution margin income statement showing sales, variable costs, and fixed costs for Product XT at the break-even point. 4 5 $ Units 6 Sales price 200 7 Variable cost per unit 1401 8 Fixed cost 270,000 9 Units 7000 10 11 12 Units 0 500 13 Sales 14 Less: Variable cost 15 Contribution Margin 16 Less: Fixed Cost 17 Total cost 18 Net Income 19 20 1,000 1,500 2,000 2,500 3,000 3,500 #### 4,500 5,000 5,500 6,000 6,500 7,000