Problem:
Xcite Equipment Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $290 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $313,200, up to a maximum capacity of 550,000 yards of rope. Forecasted variable costs are $203 per 100 yards of XT rope
Required:
Question 1: Estimate Product XT's break-even point in terms of sales units. (1 unit = 100 yards.) (Do not round intermediate calculations.)
Question 2: Prepare a contribution margin income statement showing sales, variable costs, and fixed costs for Product XT at the break-even point
Note: Please show how to work it out.