Exercise 18-3 1.A2.E3.B4.D5.F6.CExercise 18-4 Series AVariable cost Series BMixed costSeries C Curvilinear costSeries DStep-wise costSeries EFixed costExercise 18-5 1.Fixed costs + Target pretax incomeDollar sales = Contribution margin ratio$160,000 + $164,000= 25%= $1,296,0002.Sales...................................................$1,296,000Fixed costs.........................................(160,000)Pretax income....................................(164,000)Variable costs....................................$ 972,000(Alternatively: $1,296,000 in sales x [1 - 0.25 CM ratio] = $972,000)
Exercise 18-10 (a)Contribution margin per unit = $180 – $135= $45 per unit(b)Contribution margin ratio = $45 / $180= 25%(c)Break-even point in units = $562,500 / $45= 12,500 units(d)Break-even point in dollars = $562,500 / 25%= $2,250,000(Alternatively: 12,500 units x $180 = $2,250,000)Exercise 18-12 1.BLANCHARD COMPANYContribution Margin Income Statement (at Break-Even)Sales (12,500 x $180)........................................................................$2,250,000Variable costs (12,500 x $135)..........................................................1,687,500Contribution margin (12,500 x $45).................................................562,500Fixed costs.......................................................................................562,500Net income.......................................................................................$ 02.Sales (in dollars) to break even with increased fixed costsBreak-even