Cardinal Castles, Inc., makes one type of birdhouse that it sells for $30 each. Its variable cost is $14 per house, and its fixed costs total $13,840 per year. Cardinal currently has the capacity to produce up to 2,000 birdhouses per year, so its relevant range is zero to 2,000 houses.
1: Prepare a contribution margin income statement for Cardinal assuming it sells 1,100 birdhouses this year. (Input all amounts as positive values. Omit the “$” sign in your response.)
Cardinal Castles, Inc.
Contribution Margin Income Statement
Sales revenue:__________
less: variable costs:__________
contribution margin:__________
less: fixed costs:__________
income from operations:__________
2: Without any calculations, determine Cardinal’s total contribution margin if the company breaks even. (Omit the “$” sign in your response.)
Total contribution margin:$__________
3: Calculate Cardinal’s contribution margin per unit and its contribution margin ratio. (Round your contribution margin ratio answer to 2 decimal places. Omit the “$” and “%” signs in your response.)
Unit contribution margin:$__________
Contribution margin ratio:__________%
4: Calculate Cardinal’s break-even point in number of units and in sales dollars. (Round your unit answer to the next whole number. Round your sales dollars answer to the nearest whole number. Omit the “$” sign in your response.)
Break-even units:__________units
Break-even sales dollars:$__________
5: Suppose Cardinal wants to earn $20,000 this year. Determine how many birdhouses it must sell to generate this amount of profit.
Target unit sales:__________units