How do you get these answers? I need help. Compute the contribution margin per u

Question

How do you get these answers? I need help.

Compute the contribution margin per unit of Product B Compute the contribution margin ratio of Product B If only product A is sold; the breakeven point in units is? If only product A is sold; the breakeven point in dollars is? If only product B is sold; the breakeven point in units is? If only product B is sold; the breakeven point in dollars is? If only product A is sold; 168,000 units will yield how much pre-tax income? If only product A is sold; dollars sales required to yield after-tax-income of $20,000?

Explanation / Answer

Total fixed costs = 594,322+226,800 = $821,122

1. Contribution margin per unit of A = sales - variable cost = 8-4.80 = $3.20

2. Contribution margin ratio of A = contribution margin / sales per unit = 3.20/8 = 40%

3. Contribution margin per unit of B = sales - variable cost = 12-7.01 = $4.99

4. Contribution margin ratio of B = contribution margin / sales per unit = 4.99/12 = 41.58%

5. At breakeven, contribution margin = total fixed costs

So if breakeven units = X,

then 3.20X = 821,122, or X = 256,601

6. At X=256,601, breakeven sales = 8*256,601 = $2,052,808

7. If breakeven units = Y,

then 4.99Y = 821,122, or X = 164,554

8. At Y=164,554, breakeven sales = 12*164,554 = $1,974,648

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