P19-24A Solutionjm dateTest Your KnowledgeP19-24AReq. 1Sales revenue - Variable costs - Fixed costs = Operating income($12 X Units Sold -$4.80 X Units Sold) - $583,200 = 0so (Selling price - Variable Cost) X Units = $583,200Sales Rev Variable Cost Fixed costs $ 12 MINUS $ 4.80 x No. of flags = $ 583,200 Solve for Number of flags to break even = 81,000 flagsReq. 2Contribution margin = 0.60 Target number of flags for net income of $33,000 Target number of flags in dollars $ 1,027,000 Req. 3Kincaid CompanyContribution Margin Income StatementYear Ended December 31, 2012Sales revenue (72,000 X $12.00) $ 864,000 Variable costs: Cost of goods sold [72,000 X ($4.80 X 0.70)] 241,920 Operating costs [72,000 X ($4.80 X .30)] 103,680 345,600 Contribution margin 518,400 Fixed costs 583,200 Operating loss $ (64,800)Req. 4New fixed costs = $ 705,672 New variable costs = $ 5.40 Sales revenue - Variable costs - Fixed costs = Operating incomeSales Rev New Variable Cost New Fixed costs $ 12 MINUS $ 5.40 x No. of flags = $ 705,672 Solve for Number of flags to break even = 106,920 flagsBreakeven sales in dollars = $
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