Apex Global Defense manufactures the ArmorShield Tactical Vest, a high-performance body armor unit sold to military and law enforcement agencies worldwide. With growing contract demand and rising overhead commitments, management wants to perform a thorough profitability analysis and determine the break-even point to ensure sustainable operations.
Correct Answers
net Income
$3,696,000.00
break Even Sales
$3,002,000.00
break Even Units
12,667
contribution Margin Per Unit
99
Step-by-Step Solution
MIXED PROBLEM — Contribution Margin + Break-Even CONTRIBUTION MARGIN INCOME STATEMENT: Sales (50,000 units × $237.00) $11,850,000.00 Less: Variable Costs (50,000 × $138.00) $6,900,000.00 ───────────────────────────────────────────────────────── Contribution Margin $4,950,000.00 Less: Fixed Costs $1,254,000.00 ───────────────────────────────────────────────────────── Net Income $3,696,000.00 Per Unit: CM per Unit = $237.00 − $138.00 = $99.00 CM Ratio = $99.00 ÷ $237.00 = 41.77% BREAK-EVEN ANALYSIS: Break-Even Units = Fixed Costs ÷ CM per Unit Break-Even Units = $1,254,000.00 ÷ $99.00 = 12666.6667 → 12667 units (rounded up) Break-Even Sales = Fixed Costs ÷ CM Ratio Break-Even Sales = $1,254,000.00 ÷ 41.7722% = $3,002,000.00