{"id":183252,"date":"2025-01-16T06:36:18","date_gmt":"2025-01-16T06:36:18","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=183252"},"modified":"2025-01-16T06:36:20","modified_gmt":"2025-01-16T06:36:20","slug":"blanchard-company-manufactures-a-single-product-that-sells-for-184-per-unit-and-whose-total-variable-costs-are-138-per-unit","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/01\/16\/blanchard-company-manufactures-a-single-product-that-sells-for-184-per-unit-and-whose-total-variable-costs-are-138-per-unit\/","title":{"rendered":"Blanchard Company manufactures a single product that sells for $184 per unit and whose total variable costs are $138 per unit"},"content":{"rendered":"\n

Blanchard Company manufactures a single product that sells for $184 per unit and whose total variable costs are $138 per unit. The company’s annual fixed costs are $699,200. (1) Prepare a contribution margin income statement for Blanchard Company at the break-even point. BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Amount Percentage of sales<\/p>\n\n\n\n

The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n

Blanchard Company Contribution Margin Income Statement at Break-Even<\/h3>\n\n\n\n

Sales<\/strong>:
At the break-even point, the company generates enough sales to cover both fixed and variable costs, with no profit or loss. The formula for break-even sales volume is:<\/p>\n\n\n\n

[
\\text{Break-even volume} = \\frac{\\text{Fixed Costs}}{\\text{Contribution Margin per unit}}
]<\/p>\n\n\n\n

Contribution Margin per unit<\/strong>:
The contribution margin per unit is calculated as:<\/p>\n\n\n\n

[
\\text{Contribution Margin per unit} = \\text{Sales price per unit} – \\text{Variable costs per unit} = 184 – 138 = 46
]<\/p>\n\n\n\n

Now, calculate the break-even volume:<\/p>\n\n\n\n

[
\\text{Break-even volume} = \\frac{699,200}{46} = 15,200 \\text{ units}
]<\/p>\n\n\n\n

Sales Revenue<\/strong>:
At the break-even point, the sales revenue is:<\/p>\n\n\n\n

[
\\text{Sales Revenue} = 15,200 \\times 184 = 2,796,800
]<\/p>\n\n\n\n

Variable Costs<\/strong>:
The total variable costs at the break-even point are:<\/p>\n\n\n\n

[
\\text{Variable Costs} = 15,200 \\times 138 = 2,097,600
]<\/p>\n\n\n\n

Contribution Margin<\/strong>:
The contribution margin is:<\/p>\n\n\n\n

[
\\text{Contribution Margin} = \\text{Sales Revenue} – \\text{Variable Costs} = 2,796,800 – 2,097,600 = 699,200
]<\/p>\n\n\n\n

Fixed Costs<\/strong>:
Fixed costs are given as 699,200.<\/p>\n\n\n\n

Net Income<\/strong>:
At the break-even point, net income is 0 because the contribution margin exactly covers the fixed costs.<\/p>\n\n\n\n

Contribution Margin Income Statement at Break-even:<\/h3>\n\n\n\n
Amount<\/strong><\/th>Percentage of Sales<\/strong><\/th><\/tr><\/thead>
Sales<\/strong><\/td>$2,796,800<\/td><\/tr>
Variable Costs<\/strong><\/td>$2,097,600<\/td><\/tr>
Contribution Margin<\/strong><\/td>$699,200<\/td><\/tr>
Fixed Costs<\/strong><\/td>$699,200<\/td><\/tr>
Net Income<\/strong><\/td>$0<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Explanation:<\/h3>\n\n\n\n

At the break-even point, Blanchard Company\u2019s sales exactly cover the total variable and fixed costs, resulting in zero profit. The key elements of the contribution margin income statement at break-even are:<\/p>\n\n\n\n

    \n
  • Sales Revenue<\/strong> is the total amount generated from selling 15,200 units of the product at $184 per unit.<\/li>\n\n\n\n
  • Variable Costs<\/strong> are the costs associated with producing the product, totaling $2,097,600 at the break-even volume.<\/li>\n\n\n\n
  • Contribution Margin<\/strong> is the portion of sales revenue that contributes toward covering fixed costs, with 25% of the sales price being available to cover fixed costs.<\/li>\n\n\n\n
  • Fixed Costs<\/strong> remain constant at $699,200, and at break-even, they are entirely covered by the contribution margin.<\/li>\n\n\n\n
  • Net Income<\/strong> is zero at the break-even point because the contribution margin fully offsets the fixed costs.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"

    Blanchard Company manufactures a single product that sells for $184 per unit and whose total variable costs are $138 per unit. The company’s annual fixed costs are $699,200. (1) Prepare a contribution margin income statement for Blanchard Company at the break-even point. BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Amount Percentage of sales The […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-183252","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/183252","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=183252"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/183252\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=183252"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=183252"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=183252"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}