Question

Sandy Bank, Inc., makes one model of wooden canoe. Partial information is given below.

Required:

1. Complete the following table.

2. Suppose Sandy Bank sells its canoes for $580 each. Calculate the contribution margin per canoe and the contribution margin ratio.

3. This year Sandy Bank expects to sell 810 canoes. Prepare a contribution margin income statement for the company.

4. Calculate Sandy Bank’s break-even point in units and in sales dollars.

5. Suppose Sandy Bank wants to earn $85,000 profit this year. Calculate the number of canoes that must be sold to achieve this target.

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

	Number of Canoes Produced and Sold 480 550 780 Total costs Variable Costs $76,800 Fixed Costs 159,360 Total Costs $236,160 $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 $580 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 810 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 $85,000 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

1)	SBI
number of Canoes produced and sold	480	550	780
Total Cost
Variable	$     76,800.00	$     88,000.00	$ 1,24,800.00
Fixed	$ 1,59,360.00	$ 1,59,360.00	$ 1,59,360.00
Total Cost	$ 2,36,160.00	$ 2,47,360.00	$ 2,84,160.00
Cost per unit
Variable	$           160.00	$           160.00	$           160.00
Fixed	$           332.00	$           289.75	$           204.31
Total cost per unit	$           492.00	$           449.75	$           364.31
Variable cost per unit	($76800/480)	($88000/55)	($124800/780)
Fixed cost per unit	($159360/480)	($159360/550)	($159360/780)
2)
Selling Price Per unit	$           580.00
Variable cost per unit	$           160.00
Contribution Margin per unit=(A)-(B)	$           420.00
Contribution Margin Ratio=Contribution Margin per unit/Sales Price Per Unit
(Contribution margin per unit=Sales price per unit-variable price per unit)
Contribution Margin per unit=(A)	$           420.00
Sales Price per unit=(B)	580
Contribution margin ratio=(A)/(B)	72%
3)
Contribution Margin Income Statement
Sales Units(Canoes)	810
Sales Price(810*$580)=(A)	469800
Less: Variable cost(810*$160)=(B)	$ 1,29,600.00
Contribution Margin=(C )=(A)-(B)	$ 3,40,200.00
Less: Fixed Cost=(D)	159360
Income from operation=(C )-(D)	$ 1,80,840.00
4)
Breakeven Point in Units=Fixed cost/Contribution margin per unit
Fixed cost=(A)	159600
Contribution Margin per unit=(B)	$           420.00
Breakeven Point in Units=(A)/(B)	$           380.00
Breakeven point in Dollars=Fixed cost/Contribution margin ratio
Fixed cost=(A)	159600
Contribution margin ratio=(B)	72%
Break even point in Dollars=(A)/(B)	$ 2,20,400.00
5)
Number of Carones to achieve target profit
Sales to achieve target profit=Fixed cost+Target Profit/Contribution margin per unit
Target Profit=(A)	85000
Fixed cost=(B)	159360
Contribution margin per unit=(C )	$           420.00
Sales=(A)+(B)/©	581.81
Sales in whole Number(Canoes)	580