Suppose that Larimer Company sells a product for $20. Unit costs are as follows:

Direct materials	$1.70
Direct labor	1.60
Variable factory overhead	2.00
Variable selling and administrative expense	1.50

Total fixed factory overhead is $55,240 per year, and total fixed selling and administrative expense is $38,480.

	Required:
1.	Calculate the variable cost per unit and the contribution margin per unit.
2.	Calculate the contribution margin ratio and the variable cost ratio.
3.	Calculate the break-even units.
4.	Prepare a contribution margin income statement at the break-even number of units. Enter all amounts as positive numbers.

Amount Descriptions

Refer to the list below for the exact wording of text items within your income statement.

Amount Descriptions
Operating income
Operating loss
Sales
Total contribution margin
Fixed cost
Variable cost

Calculations

1. Calculate the variable cost per unit and the contribution margin per unit. Round your answers to two decimal places.

Unit variable cost
Unit contribution margin

2. Calculate the contribution margin ratio and the variable cost ratio.

Contribution margin ratio	%
Variable cost ratio	%

3. Calculate the break-even units.

Contribution Margin Income Statement

4. Prepare a contribution margin income statement at the break-even number of units. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement. Enter all amounts as positive numbers.

Larimer Company

Contribution Margin Income Statement

At Break-Even Number of Units

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