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The Peace Company has the following functional income statement for the prior month.

Sales

($50 * 100,000 units)

$5,000,000

Cost of goods sold

Direct materials

$1,200,000

Direct labor

$950,000

Variable factory overhead

$600,000

Fixed factory overhead


$850,000


$3,600,000

Gross profit

$1,400,000

Selling and administrative expense

Variable

$250,000

Fixed

$120,000

$370,000

Operating income

$1,030,000

There were no beginning and ending inventories.

Required:

a. find out the contribution margin per unit.

b. find out the contribution margin ratio.

What is the break-even point in units?

What is the amount of sales in dollars needed to obtain a before-tax profit of $40,000?

 

 

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M946296

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