5-5A:

1.Compute the break-even point in dollar sales for each product

● Product T:
408.000
Contribution margin ratio= 2.040.000 = 0.2

127.500
=> Breakeven in $= 0.2 = 637.500
● Product O:
1.785.000
Contribution margin ratio= 2.040.000 = 0.875

1.504 .500
=> Breakeven in $= 0.875 = 1.719.429
2. Decline to 40,000 units next year with no change in unit
sales price. Prepare forecasted financial results for next year
following the format of the contribution margin income
statement as just shown with columns for each of the two
products.
Price per unit= $40;
Variable cost per unit T= $32; variable cost per unit O=$5

Product T Product O
Sales 1.600.000 1.600.000
Variable costs 1.280.000 200.000
Contribution 320.000 1.400.000
margin
Fixed cost 127.500 1.504.500
Income before 192.500 -104.500
taxes
Income taxes(34% 65.450 -35.530
rate)
Net Income 127.050 -68.970

3. Increase to 65,000 units next year with no change in unit

sales price.

Product T Product O
Sales 2.600.000 2.600.000
Variable costs 2.080.000 325.000
Contribution 520.000 2.275.000
margin
Fixed cost 127.500 1.504.500
Income before 392.500 770.500
taxes
Income taxes( 34% 133.450 261.970
rate)
Net Income 259.050 508.530
5-6A
Summary: This year Calypso Company sold 60,000 units
● Price: $20/unit
● Fixed cost :
■ Manufacturing : $ 97,500
■ Selling and administrative: $ 157,500
● Variable cost:
■ Materials: $ 8
■ Direct labor: $ 5
■ Overhead cost: $1.6
■ other: $ 0.4
Next year, use new material, cost reduce
● Material cost by 50%
● Direct labor by 60%
And reduce the number of units sold
● Plan 1: Keep price, keep volume
● Plan 2: Increase price by 25%, decrease volume by
15%.
Total cost remains the same in both cases.
1. Compute the break-even point in dollar sales for both plan 1
and plan 2
Material cost = 8*0.5= 4$
Direct labor cost = 5*(1-0.6)= 2$
Total variable cost = 4+2+1.6+0.4 = 8$
● Plan 1: Price and volume không đổi

20−8
Contribution margin ratio = 20 = 0.6

255000
Break-even point in dollar = 0.6 = 425,000 $

● Plan 2: Price increases by 25% = 20*1.25= 25$,

○ volume decreases by 15% = 60,000*(1-0.15)= 51,000

25−8
Contribution margin ratio = 25 =0.68
 255000
BEP in dollar = 0.68 = 375,000 $

2. Prepare a forecasted contribution margin income statement

Plan 1 (60,000 units) Plan 2 (51,000 unit)

Sale 1,200,000 1,275,000
Variable cost 480,000 408,000
Contribution margin 720,000 867,000
Fixed cost 255,000 255,000
Income before taxes 465,000 612,000
Income taxes (30%) 139,500 183,600
Net income 325,500 428,400