Ironclad Aerospace Group is a mid-sized aerospace manufacturer based in Wichita, Kansas, specializing in precision-engineered titanium fuselage panels used in commercial and military aircraft. As the company scales production to meet a surge in defense contracts, management wants to analyze overall profitability and determine the break-even point to ensure long-term financial viability.
Correct Answers
net Income
$10,068,800.00
break Even Sales
$1,574,000.00
break Even Units
2,364
contribution Margin Per Unit
333
Step-by-Step Solution
MIXED PROBLEM — Contribution Margin + Break-Even CONTRIBUTION MARGIN INCOME STATEMENT: Sales (32,600 units × $666.00) $21,711,600.00 Less: Variable Costs (32,600 × $333.00) $10,855,800.00 ───────────────────────────────────────────────────────── Contribution Margin $10,855,800.00 Less: Fixed Costs $787,000.00 ───────────────────────────────────────────────────────── Net Income $10,068,800.00 Per Unit: CM per Unit = $666.00 − $333.00 = $333.00 CM Ratio = $333.00 ÷ $666.00 = 50.00% BREAK-EVEN ANALYSIS: Break-Even Units = Fixed Costs ÷ CM per Unit Break-Even Units = $787,000.00 ÷ $333.00 = 2363.3634 → 2364 units (rounded up) Break-Even Sales = Fixed Costs ÷ CM Ratio Break-Even Sales = $787,000.00 ÷ 50.0000% = $1,574,000.00