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Determining the break-even point

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Determining the break-even point and preparing a contribution margin income statement LO 3-1

Ritchie Manufacturing Company makes a product that it sells for $150 per unit. The company incurs variable manufacturing costs of $76 per unit. Variable selling expenses are $14 per unit, annual fixed manufacturing costs are $352,000, and fixed selling and administrative costs are $266,000 per year.

Required

Determine the break-even point in units and dollars using each of the following approaches:

  • Use the equation method.
  • Use the contribution margin per unit approach.
  • Use the contribution margin ratio approach.
  • Provide a contribution margin income statement for the break-even sales volume.

Reference no: EM132506087

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