Waldo's Water World is distributing replacement water coolers in the Montreal area for $150 per cooler. Waldo's fixed costs are equal to $60,000 per month, and the Waldo's accounting staff has calculated the monthly break-even in units to be 750.
a. Given this information, compute the variable cost per unit and the contribution margin per unit.
b. Using the amounts computed in part (a), prepare a contribution margin income statement proving that breakeven occurs at this level of sales.

Question

Quizplus · Accepted Answer

The Answer of Waldo's Water World is distributing replacement water coolers in the Montreal area for $150 per cooler. Waldo's fixed costs are equal to $60,000 per month, and the Waldo's accounting staff has calculated the monthly break-even in units to be 750.
a. Given this information, compute the variable cost per unit and the contribution margin per unit.
b. Using the amounts computed in part (a), prepare a contribution margin income statement proving that breakeven occurs at this level of sales.

Waldo's Water World Is Distributing Replacement Water Coolers in the Montreal