Question
Suppose that Larimer Company sells a product for $22. Unit costs are as follows: Direct materials $1.75 Direct labor 1.40 Variable factory overhead 2.05 Variable
Suppose that Larimer Company sells a product for $22. Unit costs are as follows:
Direct materials | $1.75 |
Direct labor | 1.40 |
Variable factory overhead | 2.05 |
Variable selling and administrative expense | 1.84 |
Total fixed factory overhead is $64,654 per year, and total fixed selling and administrative expense is $38,570.
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. |
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.
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 |
1 |
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2 |
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3 |
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4 |
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5 |
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