Timberland produces treated wood chips as a by-product of pulp manufacturing. The Company purchases materials (chemicals, etc.) for $32 per ton of chips. Variable costs, including labor, costs $10 per ton. The chips can be sold for $70 per ton. Fixed costs, all unavoidable, equals $84,000. Timberland's incremental tax rate is 30%.
Required:
1. Prepare a budgeted income statement assuming that Timberland sells 2,500 tons.
2. What is the contribution margin per ton?
3. Calculate breakeven.