Peggy’s Ribbon World makes award rosettes. Following is information about the company:

Peggy’s Ribbon World makes award rosettes. Following is information about the company:

Variable cost per rosette	$	1.23
Sales price per rosette		2.40
Total fixed costs per month		882.00

Requirement 1:

Determine how many rosettes Peggy’s must sell to break even. (Round your intermediate calculations to 2 decimal places and final answer up to next whole number.)

Break-even units

754  rosettes

Requirement 2:

Calculate the break-even point in sales dollars. (Use rounded break-even units calculated above. Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Break-even sales dollars

$ 1,809.23

 Explanation:

1.
Unit contribution margin	=	Sales price – Variable cost per unit
	=	$2.40 – $1.23
	=	$1.17

 

Break-even units	=	Total fixed costs / Unit contribution margin
	=	$882 / $1.17
	=	754 rosettes

 

2.

Break-even sales dollars	=	Break-even units × Sales price
	=	754 × $2.40 = $1,809.60

 

Paddle Away, Inc., makes one model of wooden canoe. Partial information for it follows:

Paddle Away, Inc., makes one model of wooden canoe. Partial information for it follows:

Number of canoes produced and sold		465	615	765
Total costs
Variable costs	$	64,635	?	?
Fixed costs		148,500	?	?
Total costs	$	213,135	?	?
Cost per unit
Variable cost per unit		?	?	?
Fixed cost per unit		?	?	?
Total cost per unit		?	?	?

Requirement 1:

Complete the preceding table. (Round your cost per unit answers to 2 decimal places. Omit the "$" sign in your response.)

Number of canoes produced and sold		465		615			765
Total costs
Variable costs	$	64,635	$	85,485	$		106,335
Fixed costs		148,500		148,500			148,500
Total costs	$	213,135	$	233,985	$		254,835
Cost per unit
Variable cost per unit	$	139.00	$	139.00	$		139.00
Fixed cost per unit		319.35		241.46			194.12
Total cost per unit	$	458.35	$	380.46	$		333.12
Requirement 3:
Suppose Paddle Away sells its canoes for $504 each. Calculate the contribution margin per canoe and the contribution margin ratio. (Round your percentage answer to nearest whole percentage. Omit the "$" & "%" signs in your response.)

Unit contribution margin	$	365
Contribution margin ratio		72	%

 Explanation:

3:

Unit contribution margin       = Sales price – Variable cost per unit

= $504  –  $139

= $365 per canoe

Contribution margin ratio     = Unit contribution margin / Sales price

=  $365 / $504

= 72 %

Requirement 4:

Next year Paddle Away expects to sell 815 canoes. Prepare a contribution margin income statement for the company. (Input all amounts as positive values. Omit the "$" sign in your response.)

Paddle Away Inc. Contribution Margin Income Statement For the Current Year
Sales revenue	$	410,760
Less: Variable costs		113,285
Contribution margin	$	297,475
Less: Fixed costs		148,500
Income from operations	$	148,975

Explanation:

4:

Sales Revenue (815 × $504)	$	410,760
Less: Variable Costs (815 × $139)		113,285
Contribution Margin  (815 × $365)	$	297,475