Question

In: Accounting

Billings Company has the following information available for September 2017. Unit selling price of video game...

Billings Company has the following information available for September 2017.

Unit selling price of video game consoles $784

Unit variable costs $549

Total fixed costs $105,750

Units sold 1,176

(a) Compute the unit contribution margin.

(b) Prepare a CVP income statement that shows both total and per unit amounts

(c) Compute Billings break-even point in units

(d) Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.

Expert Solution

Solution :-

(a) Calculation of Unit contribution margin :-
Selling Price per unit = $ 784

Less : Variable costs per unit = $ 549

Contribution margin per unit = $ 235

Therefore, Unit contribution margin = $ 235 per unit

(b) CVP Income Statement

Particulars	Total	Unit
Sales ( 1176 Units )	$ 921984	$ 784
Less : Variable Costs	$ 645624	$ 549
Contribution Margin	$ 276360	$ 235
Less : Fixed costs	$ 105750
Net Income	$ 170610

(c) Calculation of break-even point in units :-

Break Even Point = Fixed Costs / Contribution Margin per unit

Fixed Costs = $ 105750

Contribution Margin per Unit = $ 235 per unit

Break Even Point = $ 105750 / $235 = 450 Units

(d) CVP Income Statement for the break even unit

Particulars	Total	Unit
Sales ( 450 Units )	$ 352800	$ 784
Less : Variable Costs	$ 247050	$ 549
Contribution Margin	$ 105750	$ 235
Less : Fixed costs	$ 105750
Net Income	$ 0

ekkarill92 answered 1 year ago

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