The income statement for Bradford Machine Company for 2015 appears below. $\begin{array}{c}
\text {BRADFORD MACHINE COMPANY }\
\text {Income Statement}\
\text { For the Year Ended December 31, 2015}\\
\begin{array}{llr}
\text { Sales (40,000 units) } &\$1,000,000\
\text { Variable expenses } &\underline{700,000}\
\text { Contribution margin } &300,000\
\text { Fixed expenses} &\underline{360,000}\
\text { Net income (loss) } &\$(60,000)\
\end{array}\end{array}$
Instructions
Answer the following independent questions and show computations using the contribution margin technique to support your answers:
1. What was the company's break-even point in sales dollars in 2015?
2. How many additional units would the company have had to sell in 2016 in order to earn net income of $45000?
3. If the company is able to reduce variable costs by $2.50 per unit in 2016 and other costs and unit revenues remain unchanged how many units will the company have to sell in order to earn a net income of $45000?

Question

The income statement for Bradford Machine Company for 2015 appears below. $\begin{array}{c}
  \text {BRADFORD MACHINE COMPANY }\
  \text {Income Statement}\
  \text { For the Year Ended December 31, 2015}\\
\begin{array}{llr}
  \text { Sales (40,000 units)  } &\$1,000,000\
 \text { Variable expenses } &\underline{700,000}\
 \text {  Contribution margin } &300,000\
 \text {   Fixed expenses} &\underline{360,000}\
 \text {  Net income (loss) } &\$(60,000)\
\end{array}\end{array}$
 Instructions
Answer the following independent questions and show computations using the contribution margin technique to support your answers:
1. What was the company's break-even point in sales dollars in 2015?
2. How many additional units would the company have had to sell in 2016 in order to earn net income of $45000?
3. If the company is able to reduce variable costs by $2.50 per unit in 2016 and other costs and unit revenues remain unchanged how many units will the company have to sell in order to earn a net income of $45000?

Quizplus · Accepted Answer

The Answer of The income statement for Bradford Machine Company for 2015 appears below. $\begin{array}{c}
  \text {BRADFORD MACHINE COMPANY }\
  \text {Income Statement}\
  \text { For the Year Ended December 31, 2015}\\
\begin{array}{llr}
  \text { Sales (40,000 units)  } &\$1,000,000\
 \text { Variable expenses } &\underline{700,000}\
 \text {  Contribution margin } &300,000\
 \text {   Fixed expenses} &\underline{360,000}\
 \text {  Net income (loss) } &\$(60,000)\
\end{array}\end{array}$
 Instructions
Answer the following independent questions and show computations using the contribution margin technique to support your answers:
1. What was the company's break-even point in sales dollars in 2015?
2. How many additional units would the company have had to sell in 2016 in order to earn net income of $45000?
3. If the company is able to reduce variable costs by $2.50 per unit in 2016 and other costs and unit revenues remain unchanged how many units will the company have to sell in order to earn a net income of $45000?

The Income Statement for Bradford Machine Company for 2015 Appears