Rubber and Steel Company is planning to manufacture a new product. The variable manufacturing costs will be $59 per unit and the fixed costs are estimated to be $6633. The selling price of the product is to be $144 per unit. Variable selling expense is expected to be $18 per unit. (a) Calculate the contribution margin per unit. (b) Determine the contribution rate. (c) Calculate the break-even point in units. (d) Determine the break-even point in sales dollars.
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Contribution margin per unit = Selling price per unit - Variable manufacturing costs per unit - Variable selling expense per unit Contribution margin per unit = $144 - $59 - $18 Contribution margin per unit = $67 Show more…
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Ritchie Manufacturing Company makes a product that it sells for $200 per unit. The company incurs variable manufacturing costs of $110 per unit. Variable selling expenses are $20 per unit, annual fixed manufacturing costs are $466,000, and fixed selling and administrative costs are $269,000 per year. Required: Determine the break-even point in units and dollars using each of the following approaches: a. Use the equation method. b. Use the contribution margin per unit approach. c. Use the contribution margin ratio approach. d. Prepare a contribution margin income statement for the break-even sales volume.
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