50.1K

Verified Solution

Link Copied!

APPLY THE CONCEPTS: Break- Even Point in Units The break-even point can be expressed in terms of sales dollars or number of units. The break-even units tells us how many units must be sold so that operating income is $0. Assume that you are part of the accounting team for Logan Manufacturing. The company currently expects to sell 689 units for total revenue of $20,150 each month. Logan Manufacturing estimates direct materials costs of $3,150, direct labor costs of $4,200, variable overhead costs of $2,100, and variable selling and administrative costs of $1,050. Fixed costs of $6,650 are also expected, which includes fixed overhead and selling and administrative costs. Using this information, complete the contribution margin income statement shown below Logan Manufacturing Contribution Sales Less: Contribution margin Less: Fixed costs Operating income Variable costs Feedback Check My Work Review the formula and structure of this statement from the first two steps above, and apply these values. Recall that direct labor and direct materials are included with variable costs. Logan Manufacturing is examining cost behavior patterns. Your recommendation is to first determine the break-even point in units. First, calculate the contribution margin (CM) per unit (rounded to the nearest dollar). Next, complete the formula below to determine the break-even units. Total Fixed Costs/ Contribution Margin per Unit Units units

Answer & Explanation Solved by verified expert

See Answer