The Following Information Is for a Product Manufactured and Sold

question 22

Short Answer

The following information is for a product manufactured and sold by Drake Company:
Sales price per unit: $100Variable cost per unit: $30Total annual fixed costs: $350,000Required:Calculate the contribution margin per unit.How many units must Drake sell to break-even?How many units must Drake sell to achieve a profit of $35,000?

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Definitions:

Consolidated Income Tax Return

A single income tax return filed by an affiliated group of corporations, combining their tax liabilities.

Operating Income

Represents the profit a company makes after deducting operating expenses such as wages and cost of goods sold (COGS), but before interest and taxes.

Initial Value Method

An accounting approach where investments are first recorded at their acquisition cost.

Intra-entity Transfers

Transactions occurring between divisions or units within the same company, affecting financial statements without impacting the consolidated financial position.