Taveras Industries developed the following information for the product it sells: $\begin{array}{ll}
\text { Sales price } & \$ 50 \text { per unit } \
\text { Variable cost of goods sold } & \$ 28 \text { per unit } \
\text { Fixed cost of goods sold } & \$ 650,000 \
\text { Variable selling expense } & 10 \% \text { of sales price } \
\text { Variable administrative expense } & \$ 2.00 \text { per unit } \
\text { Fixed selling expense } & \$ 400,000 \
\text { Fixed administrative expense } & \$ 300,000
\end{array}$ For the year ended December 31 2016 Taveras produced and sold 100000 units of product.
Instructions
(a) Prepare a CVP income statement using the contribution margin format for Taveras Industries for 2016.
(b) What was the company's break-even point in units in 2016? Use the contribution margin technique.
(c) What was the company's margin of safety in dollars in 2016?

Question

Quizplus · Accepted Answer

The Answer of Taveras Industries developed the following information for the product it sells: $\begin{array}{ll}
\text { Sales price } & \$ 50 \text { per unit } \
\text { Variable cost of goods sold } & \$ 28 \text { per unit } \
\text { Fixed cost of goods sold } & \$ 650,000 \
\text { Variable selling expense } & 10 \% \text { of sales price } \
\text { Variable administrative expense } & \$ 2.00 \text { per unit } \
\text { Fixed selling expense } & \$ 400,000 \
\text { Fixed administrative expense } & \$ 300,000
\end{array}$ For the year ended December 31 2016 Taveras produced and sold 100000 units of product.
Instructions
(a) Prepare a CVP income statement using the contribution margin format for Taveras Industries for 2016.
(b) What was the company's break-even point in units in 2016? Use the contribution margin technique.
(c) What was the company's margin of safety in dollars in 2016?

Taveras Industries Developed the Following Information for the Product It