Reference no: EM131560976

Suppose that Adams Company sells a product for $19. Unit costs are as follows:

Direct materials $1.95

Direct labor 1.50

Variable factory overhead 2.05

Variable selling and administrative expense 0.96

Total fixed factory overhead is $51,658 per year, and total fixed selling and administrative expense is $38,630.

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. Contribution margin income statement at the break-even number of units.