Pathside Advanced Corp. is a mid-sized manufacturer of NeuroPulse diagnostic sensors used in clinical imaging equipment, operating out of facilities in Columbus, Ohio. Management is conducting a comprehensive profitability review and wants to determine the contribution margin, net income at current production levels, and the break-even point in both units and sales dollars to guide next quarter's capacity decisions.
Correct Answers
net Income
$5,304,600.00
break Even Sales
$3,019,148.94
break Even Units
10,979
contribution Margin Per Unit
141
Step-by-Step Solution
MIXED PROBLEM — Contribution Margin + Break-Even CONTRIBUTION MARGIN INCOME STATEMENT: Sales (48,600 units × $275.00) $13,365,000.00 Less: Variable Costs (48,600 × $134.00) $6,512,400.00 ───────────────────────────────────────────────────────── Contribution Margin $6,852,600.00 Less: Fixed Costs $1,548,000.00 ───────────────────────────────────────────────────────── Net Income $5,304,600.00 Per Unit: CM per Unit = $275.00 − $134.00 = $141.00 CM Ratio = $141.00 ÷ $275.00 = 51.27% BREAK-EVEN ANALYSIS: Break-Even Units = Fixed Costs ÷ CM per Unit Break-Even Units = $1,548,000.00 ÷ $141.00 = 10978.7234 → 10979 units (rounded up) Break-Even Sales = Fixed Costs ÷ CM Ratio Break-Even Sales = $1,548,000.00 ÷ 51.2727% = $3,019,148.94