Salamone Corp. makes a desk specially designed for personal computers. The desk sells for $200.
Data for last year's operations follow:
|
Units in beginning inventory
|
0
|
|
Units produced
|
10,000
|
|
Units sold
|
9,000
|
|
Units in ending inventory
|
1,000
|
|
Variable costs per unit:
|
|
|
Direct materials
|
$ 40
|
|
Direct labour
|
35
|
|
Variable manufacturing overhead
|
10
|
|
Variable selling and administrative
|
25
|
|
Total variable cost per unit
|
$ 110
|
|
Fixed costs:
|
|
|
Fixed manufacturing overhead
|
$300,000
|
|
Fixed selling and administrative
|
450,000
|
|
Total fixed costs
|
$750,000
|
Required:
Assume that the company uses variable costing. Compute the unit product cost for one computer desk.
Assume that the company uses variable costing. Prepare a contribution format income statement for the year.
What is the company's break-even point in terms of units sold?