Ramada Company produces one golf cart model A partially complete table of Requir

Question

Ramada Company produces one golf cart model A partially complete table of Required 1.Complete the table. (Round your "Cost per Uni" answers to 2 decimal places) company costs follows mber of Golf Carts Produced and Sold 1500 Units 2000 Units 2500 Units Total costs S 1040,000 600,000 1,640,000 Variable costs Fixed costs per year Total costs Cost per unit Variable cost per unt Fixed cost per unit Total oost per unt 2. Ramada sells its carts for $1,300 each. Prepare Goltf Carts Produced and Sold 1500 a contribution margin income statement for each of the three production levels given in the table. Contribution Margin Net Operating Inoome

Explanation / Answer

Number of Golf club 1000 units 2000 Units 2500 Unita Total cost: Variable cost 520,000 1,040,000 780,000 Fixed cost 600,000 600,000 600,000 ztotal cost 1,120,000 1,640,000 1,380,000 Cost per unit: Variable c ost per unit 520 520 520 Fixed cost per unit 600 300 240 Total cost pe r unit 1,120 820 760 Req b: Golf carts esold 1,000 2,000 2500 Seelling price (@1300) 1,300,000 2,600,000 32,500,000 Less: Varable cost @ 520 520,000 1,040,000 600000 Contribution margin Less: Fixed cost 600,000 600,000 6,000,000 Contribution margin -80,000 440,000 0 Req c: CM per unit =sales-VC = 1300-520 = 780 CM ratio = CM/ Sales *100 = 780/1300*100= 60% Req d: Yes, as the sales are above Break even Req e: Desired proftis :24000 Desired contribution = 24000+600,000 = 624,000 Desired sasles = Desired contribution / CM pere unit = 62 624000/520 = 1200 units Req f: Contribution: 2050 units @780 = 1599000 Net income = Contribution-fixed cost = 1599,000-600,000 = 999,000 DOL = Contribution/ Net income = 1599,000/999,000 = 1.60 Req f: Increase in sale will effect the increase in profits by 16% (i.e. 10*1.6)

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