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Prepare a contribution margin income statement

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Reference no: EM132912744

Aussie Skateboards Ltd provides the data below relating to its single product for 2021:

Selling price per skateboard $180
Annual fixed manufacturing costs $620,400
Annual fixed non-manufacturing costs $260,000
Variable manufacturing costs per skateboard $100
Variable selling costs per skateboard $18
Annual sales volume expected in 2021: 18,000 skateboards

Required:

Problem 1: Calculate the breakeven point in units and sales dollars

Problem 2: Prepare a contribution margin income statement for 2021, for 18,000 skateboards sold

Problem 3: From the data provided by Aussie Skateboards Ltd for 2021, if the company decreases the price to $170 it is estimated the annual sales volume would increase to 20,000 skateboards per year. Should the company reduce the price? Why? (show all your calculations to justify your answer)

Problem 4: The production capacity of Aussie Skateboards Ltd is 24,000 skateboards per year. The company received an offer from Sport Supplies Ltd to purchase from Aussie Skateboards an additional 5,000 skateboards in 2021 at $110 per skateboard. Aussie Skateboards would not incur any selling costs for this order but it would have to hire a supervisor only for this special order at a cost of $30,000. Should Aussie Skateboards accept this order? Why? (show all your calculations to justify your answer)

Reference no: EM132912744

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