Blanchard Company manufactures a single product that sells for $120 per unit and whose total variable costs are $90 per unit. The company’s annual fixed costs are $432,000. (1) Prepare a contribution margin income statement for Blanchard Company at the break-even point.

Blanchard Company manufactures a single product that sells for $120 per unit and whose total variable costs are $90 per unit. The company’s annual fixed costs are $432,000.

(1)	Prepare a contribution margin income statement for Blanchard Company at the break-even point.

Explanation:(1) 

Sales: (14,400 × $120) = 1,728,000

Variable costs: (14,400 × $90) = 1,296,000

Contribution margin: (14,400 × $30) = 432,000

(2)

Sales (in dollars) to break even with increased fixed costs

		(Original fixed costs + Additional fixed costs)
Break-even	=
		Contribution margin ratio

=

($432,000 + $129,000) / 25% = $2,244,000