Hawk Homes, Inc., makes one type of birdhouse that it sells for $30.70 each. Its...
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Accounting
Hawk Homes, Inc., makes one type of birdhouse that it sells for $30.70 each. Its variable cost is $13.90 per house, and its fixed costs total $14,683.20 per year. Hawk currently has the capacity to produce up to 2,900 birdhouses per year, so its relevant range is 0 to 2,900 houses.
Required: 1. Prepare a contribution margin income statement for Hawk assuming it sells 1,110 birdhouses this year.
2. Without any calculations, determine Hawks total contribution margin if the company breaks even.
3. Calculate Hawks contribution margin per unit and its contribution margin ratio.
4. Calculate Hawks break-even point in number of units and in sales revenue.
5. Suppose Hawk wants to earn $24,000 this year. Determine how many birdhouses it must sell to generate this amount of profit.
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