Blanchard Company manufactures a single product that sells for $180 per unit and whose total variable costs are $135 per unit. The company’s annual fixed costs are $562,500. (1) Prepare a contribution margin income statement for Blanchard Company showing sales, variable costs, and fixed costs at the break-even point. (2) Assume the company’s fixed costs increase by $135,000. What amount of sales (in dollars) is needed to break even?

Part (a)

At the break-even position, the Income Statement is as under:

Sales   12500 * $180                     $2,250,000

Variable costs  12500 * $135       ($1,687,500)

Contribution Margin                       $562,500

Fixed Cost                                      ($562,500)

Profit for the year                              $0

Part (B)

The sales required to breakeven due to increased fixed cost is $2,790,000

Explanation:

The breakeven point at normal fixed costs is:

Breakeven Point = Fixed Cost / Contribution per unit

Putting values we have:

Breakeven Point = $562,500 / ($180 - $135)  = 12500 Units.

If the fixed costs increases by $135,000 which means the fixed cost becomes $697,500 then the breakeven point increases to:

Breakeven Point = $697,500 / ($180-135) = 15500 Units

The Sales required in dollars to breakeven on this new fixed cost level is:

Breakeven Sales = 15500 Units * 180 = $2,790,000

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi

answer; dividing net income by 1- t ;