Question

Sandy Bank, Inc., makes one model of wooden canoe. Partial information for it follows:

Required:
1. Complete the following table. (Round your "Cost per Unit" answers to 2 decimal places.)

	Number of Canoes Produced and Sold 460 610 750 Total costs Variable Costs $72,680 Fixed Costs 151,800 Total Costs $224,480 $0 $0 Cost per Unit Variable Cost per Unit Fixed Cost per Unit Total Cost per Unit $0.00 $0.00 $0.00

2. Suppose Sandy Bank sells its canoes for $570 each. Calculate the contribution margin per canoe and the contribution margin ratio. (Round your intermediate calculations and final answers to 2 decimal places. Round your "percentage" answer to 2 decimal places. (i.e. .1234 should be entered as 12.34%.))

	Unit Contribution Margin per Canoe Contribution Margin Ratio %

3. This year Sandy Bank expects to sell 800 canoes. Prepare a contribution margin income statement for the company. (Round your intermediate calculations to 2 decimal places.)

	SANDY BANK, Inc. Contribution Margin Income Statement For the Current Year Contribution Margin Income from Operations

4. Calculate Sandy Bank’s break-even point in units and in sales dollars. (Round final answers to the nearest whole number).

	Break-Even Units Canoes Break-Even Sales Revenue

5. Suppose Sandy Bank wants to earn $80,000 profit this year. Calculate the number of canoes that must be sold to achieve this target. (Round Unit Contribution Margin to 2 decimal places. Round your answer to the next whole number.)

	Target Sales Units Canoes

Answer 1

	Number of Canoes produced and sold				460	610	750
	total costs
	variable costs				72,680	96380	118500
	fixed costs				151,800	151,800	151,800
	total costs				224,480	248180	270300
	cost per unit
	variable cost per unit				158.00	158.00	158.00
	fixed cost per unit				330.00	248.85	202.40
	total cost per unit				488.00	406.85	360.40
2)	unit contribution margin			(570-158)		412	per canoe
	contribution margin ratio			(412/570)		72.28%
3)		contribution margin income statement
	sales		(800*570)			456000
	less variable expense (840*149)		(800*158)			126400
	Contribution margin					329600
	less fixed expense					151,800
	Net income					177,800
4)	Break even units					368	canoes
	break even sales revenue					209760
	BEP(units) = fixed cost/contribution margin per unit
		151800/412
	BEP(sales) = 368*570
		206280
5)	Target sale units					563	canoes
	(151800+80000)/412
	562.6214