incurred $103,600 of fixed cost and $118,400 of variable cost when 3200 units of
ID: 2331138 • Letter: I
Question
incurred $103,600 of fixed cost and $118,400 of variable cost when 3200 units of product were made and sold. ir the company's volume increases to 3700 units (within relevant range), the total cost per unit will be: A) $65.00. B) $32.00. C) $28.0o D) $60.00 12) The folliowing income statement is provided for Ramirez Company for the current year Sales revenue (3300 units x $20.80 per unit) Cost of goods sold (variable; 3300 units x $8.80 per unit) Cost of goods sold (fixed) Gross margin Administrative salaries 80 per unit)$68 640 (29,040) (4800 ) 34.800 (6800 (4800) Supplies (3300 units x $2.80 per unit) 40 Net income What amount was the company's contribution margin? A) $30,360 B) $13,960 C) $39,600 D) $34,800 13) Pierce Company's break-even point is 21,000 units. Its product sells for $31 and has a $12 variable cost per unit. What is the company's total fixed cost amount? A) $651,000 B) $252,000 C) $399,000 D) Fixed costs cannot be computed with the information provided. 14) Zeus, Inc. produces a product that has a variable cost of $8 per unit. The company's fixesd costs are $40,000. The product sells for $12 a unit and the company desires to earn $25,000 profit. What is the volume of sales in units required to achieve the target profit? (Do not round intermediate calculations.) A) 10,000 units B) 10,500 units C) 16,250 units D) 5625 units 15) Burke Company has a break-even of $800,000 in total sales. Assuming the company sells its product for $50 per unit, what is its margin of safety in units if sales total $1,000,000? A) 800 units B) 4000 units C) 16,000 units D) 20,000 unitsExplanation / Answer
Answer to Question 11:
When 3,200 units were produced and sold:
Fixed Cost = $103,600
Variable Cost = $118,400
Variable Cost per unit = $118,400 / 3,200
Variable Cost per unit = $37
When 3,700 units were produced and sold:
Fixed Cost = $103,600
Variable Cost = $37 * 3,700
Variable Cost = $136,900
Total Cost = Variable Cost + Fixed Cost
Total Cost = $136,900 + $103,600
Total Cost = $240,500
Total Cost per unit = $240,500 / 3,700
Total Cost per unit = $65.00
Answer to Question 12:
Contribution Margin = Sales Revenue - Variable Cost of Goods Sold - Supplies
Contribution Margin = $68,640 - $29,040 - $9,240
Contribution Margin = $30,360
Answer to Question 13:
Contribution Margin per unit = Selling Price - Variable Cost per unit
Contribution Margin per unit = $31 - $12
Contribution Margin per unit = $19
At breakeven:
Fixed Cost = Contribution Margin
Fixed Cost = $19 *21,000
Fixed Cost = $399,000
Answer to Question 14:
Contribution Margin per unit = Selling Price - Variable Cost per unit
Contribution Margin per unit = $12 - $8
Contribution Margin per unit = $4
Sales Volume = (Fixed Cost + Target Profit) / Contribution Margin per unit
Sales Volume = ($40,000 + $25,000) / $4
Sales Volume = 16,250 units
Answer to Question 15:
Margin of Safety in dollars = Sales - Breakeven
Margin of Safety in dollars = $1,000,000 - $800,000
Margin of Safety in dollars = $200,000
Margin of Safety in units = Margin of Safety in dollars / Selling Price
Margin of Safety in units = $200,000 / $50
Margin of Safety in units = 4,000 units
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