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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Exercise 15-24 BASIC BREAK-EVEN CALCULATIONS
Suppose that Adams Company sells a product for $16. Unit costs are as follows:
Â
Direct materials |
$3.90 |
Direct labor |
1.40 |
Variable overhead |
2.10 |
Variable selling and administrative expense |
1.60 |
Total fixed overhead is $52,000 per year, and total fixed selling and administrative expense is $37,950.
Â
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.
Â
3.    Calculate the break-even units.
4.    Prepare a contribution margin income statement at the break-even number of units.
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