Carla Vista Company has the following information available for September 2020. Unit selling price of video game consoles $410
Unit variable costs $328
Total fixed costs $36,900
Units sold 600
1. Compute the unit contribution margin.
2. Prepare a CVP income statement that shows both total and per unit amounts.
3. Compute Carla Vista’ break-even point in units.
4. Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.

Instructions are below.

Explanation:

Giving the following information:

Unit selling price of video game consoles $410

Unit variable costs $328

Total fixed costs $36,900

Units sold 600

First, we need to determine the unitary contribution margin:

Unitary contribution margin= 410 - 328= $82

Contribution margin income statement:

Sales= 600*410= 246,000

Total variable cost= 600*328= (196,800)

Total contribution margin= 49,200

Fixed costs= (36,900)

Net operating income= $12,300

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 39,200/82

Break-even point in units= 478 units

Finally, the income statement for the break-even point:

Sales= 478*410= 195,980

Total variable cost= 478*328= (156,784)

Total contribution margin= 39,196

Total fixed costs= (39,200)

Net operating income= (4)

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