PA6-1 Calculating Contribution Margin, Contribution Margin Ratio, Break-Even Poi

Question

PA6-1 Calculating Contribution Margin, Contribution Margin Ratio, Break-Even Point LO 6-1,6-2] Hermosa, Inc., produces one model of mountain bike. Partial information for the company follows: Number of bikes produced and sold Total costs 510 830 930 Variable costs Fixed costs per year $119,340 $? Total costs Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit s 517.75 Required 1. Complete the table. (Round your "Cost per Unit" answers to 2 decimal places.) 830 Units 930 Units Number of bikes produced and sold 510 Units Total costs $119,340 Variable costs Fixed costs per year $ 119,340 S Total costs Cost per unit Variable cost per unit

Explanation / Answer

1) 510 units 830 units 930 units Number of bikes produced and sold total costs Variable costs 119,340 194220 217620 fixed costs per year 235512.5 235512.5 235512.5 total costs 354,853 429732.5 453132.5 cost per unit Variable cost per unit 234 234 234 fixed cost per unit 461.79 283.75 253.24 total cost per unit 695.79 517.75 487.24 variable cost per unit =119340/510 = $234 per unit fixed cost = (517.75-234) = 283.75 per unit for 830 units total fixed cost =283.75*830= 235512.5 2) contribution margin = sales - variable cost contribution margin ratio = contribution/sales I have taken selling price per unit as $780 in case it is different figure than calculate accordingly 510 units 830 units 930 units contribution margin ratio 70% 70% 70% total contribution margin ratio 278460 453180 507780 contribution = 780-234 546 ratio = 546/780 70.00% total contribution margin ratio = units* $546 3) Break even units = total fixed cost/contribution per unit Break even sales = total fixed cost/contribution margin ratio BEP(units) = 235512.5/546 431.3416 break even sales = 235512.5/70% 336446.4 Break even units 431 units break even sales revenue 336,446

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