Vezinov Company manufactures portable heaters and sells them for $200 each. According to the company's records, the

Question:

Vezinov Company manufactures portable heaters and sells them for $200 each. According to the company's records, the variable costs, including direct labor and direct materials, are $80. Factory depreciation and other fixed manufacturing costs are $960,000 per year. Vezinov pays its salespeople a commission of $20 per unit. Annual fixed selling and administrative costs are $240,000.
Required
Determine the break-even point in units and dollars, using each of the following:
a. Use the equation method.
b. Use the per unit approach.
c. Use the ratio approach.
d. Confirm your results by preparing a income statement for the break-even point sales volume.
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...