PARAMETERS FOR BASELINECASE
The following numbers areestimates for the upcoming year for a manufacturing company.
Since the company is effectiveat implementing a JIT inventory system, assume there is
no beginning or ending inventory.
No. of units sold	120,000
Selling price per unit	$240.00
	Fixed Expenses	VariableExpenses         (per unitsold
Production costs:
Direct materials		$18.00
Direct labor		36.00
Factory overhead	$2,160,000	24.00
Marketing expenses:
Sales salaries andcommissions	540,000	7.50
Advertising	360,000
Miscellaneous mktg.expenses	108,000
Administration expenses:
Office salaries	720,000
Supplies	105,000	1.50
Miscellaneous admin.expenses	72,000
TOTALEXPENSES	$4,065,000	$87.00

Prepare a contribution margin income statement (alsocalled a variable-costing income statement) for the manufacturingcompany for the upcoming year. Key in proper headings.

Check figure: Operating profit (operating income) of$14,295,000.

Compute the company’s contribution margin per unit andcontribution margin percentage for the upcoming year. Thecontribution margin percentage is calculated as contribution marginper unit / selling price per unit or as total contribution margin /total revenue. Make these calculations below your income statement.Clearly label these calculations.

Calculate the company’s breakeven point inunits for the upcoming year. Make this calculation belowyour contribution margin calculations. Use Excel’s “round” functionto round up to the nearest whole number. To do this, move yourcurser to the cell beside the decimal number and key in thefollowing formula: =ROUNDUP(cell reference,0). Theitalicized cell reference means you need to key in the cell wherethe decimal number is located (e.g., F12). The number 0 means zerodecimal places. Clearly label this calculation.

Calculate the company’s breakeven point in salesdollars for the upcoming year. Make this calculation belowyour breakeven calculation in units and use the company’scontribution margin percentage to make this calculation.Clearly label this calculation.