Matthew_McCoy_Problem 22-6A

# Matthew_McCoy_Problem 22-6A - CALYPSO COMPANY Forecasted...

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Matthew McCoy Problem 22-6A Break-even point in dollars = Fixed costs/ Contribution margin ratio Contribution margin ratio = Contribution margin per unit/ Sales price per unit Contribution margin per unit = Sales price per unit - Total variable cost per unit (a) Contribution margin per unit = 20 - 8 = 12 (a) Contribution margin ratio = 12/ 20 = .6 or 60% (a) Break-even point in dollars = 255,000/ .6 = \$425,000 (b) Contribution margin per unit = 25 - 8 = 17 (b) Contribution margin ratio = 17/ 25 = .68 or 68% (b) Break-even point in dollars = 255,000/ .68 = \$375,000

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Unformatted text preview: CALYPSO COMPANY Forecasted Contribution Margin Income Statement Plan 1 Plan 2 Sales Plan 1 (60,000 @ \$20) \$1,200,000 Plan 2 (51,000 @ \$25) \$1,275,000 Variable costs Plan 1 (60,000 @ \$8) \$480,000 Plan 2 (51,000 @ \$8) \$408,000 Contribution margin \$720,000 \$867,000 Total fixed costs \$255,000 \$255,000 Income before taxes \$465,000 \$612,000 Income taxes Plan 1 (\$464,285.71 X 30%) \$139,500 Plan 2 (\$612,000 X 30%) \$183,600 Net income \$325,500 \$428,400...
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Matthew_McCoy_Problem 22-6A - CALYPSO COMPANY Forecasted...

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