ACC – Dester Manufacturing Company

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Description

Dester Manufacturing Company makes a product that it sells for $50 per unit. The company incurs variable manufacturing costs of $20 per unit. Variable selling expenses are $5 per unit, annual fixed manufacturing costs are $187,000, and fixed selling and administrative costs are $113,000 per year.

Required

Determine the break-even point in units and dollars using each of the following approaches:

Equation method.

Contribution margin per unit.

Contribution margin ratio.

Confirm your results by preparing a contribution margin income statement for the break-even sales volume.

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