Quarry Hill Systems is a mid-sized manufacturer based in Vermont that produces rugged industrial data acquisition terminals used in mining and quarrying operations. After a slower-than-expected sales year, management wants to analyze the company's profitability at current volume and determine the break-even point to guide next year's production and pricing strategy.
Correct Answers
net Income
-$728,800.00
break Even Sales
$3,696,750.00
break Even Units
10,841
contribution Margin Per Unit
176
Step-by-Step Solution
MIXED PROBLEM — Contribution Margin + Break-Even CONTRIBUTION MARGIN INCOME STATEMENT: Sales (6,700 units × $341.00) $2,284,700.00 Less: Variable Costs (6,700 × $165.00) $1,105,500.00 ───────────────────────────────────────────────────────── Contribution Margin $1,179,200.00 Less: Fixed Costs $1,908,000.00 ───────────────────────────────────────────────────────── Net Income $728,800.00 Per Unit: CM per Unit = $341.00 − $165.00 = $176.00 CM Ratio = $176.00 ÷ $341.00 = 51.61% BREAK-EVEN ANALYSIS: Break-Even Units = Fixed Costs ÷ CM per Unit Break-Even Units = $1,908,000.00 ÷ $176.00 = 10840.9091 → 10841 units (rounded up) Break-Even Sales = Fixed Costs ÷ CM Ratio Break-Even Sales = $1,908,000.00 ÷ 51.6129% = $3,696,750.00