EXERCISE 6-1

1).
Total Per Unit
Sales (10,100 units) $ 353,000 $ 35.00
(-) Variables Expenses 202,000 20.00
Contribution Margin $ 151,000 $ 15.00
(-) Fixed Expenses 135,000
Net Operating Income $ 16,500

2).

Total Per Unit

Sales (9,900 units) $ 346,000 $ 35.00
(-) Variables Expenses 198,000 20.00
Contribution Margin $ 148,000 $ 15.00
(-) Fixed Expenses 135,000
Net Operating Income $ 13,500

3).

Total Per Unit

Sales (9000 units) $ 315,000 $ 35.00
(-) Variable Expenses 180,000 20.00
Contribution Margin $ 135,000 $ 15.00
(-) Fixed Expenses 135,000
Net Operating Income 0
EXERCISE 6-5

Profits = (sales – Variable Expenses) – Fixed Expenses

1. $ 15Q = $12Q + $4,200 - $ 4,197

$ 3Q = 3
Q=1

2. Profits = (15-12)-4,200
Loss = $ 4,197
Sales = 12 + 4,200 – 4,197
Sales = $ 15

3. Break-even point in unit sold = Fixed Expenses

Unit Contribution Margin

= $ 4,200
$ 3 (15-12)
Break even point (unit) = 1,400 units

4. Break-even point in total sales dollars = Fixed Expenses

CM ratio

= 4,200
0.2

Break even point ($) = $ 21,000