At the break-even point, Jefferson Company sells 115,000 units and has fixed cos

Question

  At the break-even point, Jefferson Company sells 115,000 units and has fixed cost of $351,800. The variable cost per unit is $0.10. What price does Jefferson charge per unit? Round to the nearest cent.
$

2. Sooner Industries charges a price of $77 and has fixed cost of $461,000. Next year, Sooner expects to sell 18,500 units and make operating income of $192,000. What is the variable cost per unit? What is the contribution margin ratio? Round your variable cost per unit answer to the nearest cent. Enter the contribution margin ratio as a percentage, rounded to two decimal places.

3. Last year, Jasper Company earned operating income of $18,240 with a contribution margin ratio of 0.2. Actual revenue was $228,000. Calculate the total fixed cost. Round your answer to the nearest dollar, if required.
$

4. Laramie Company has variable cost ratio of 0.6. The fixed cost is $108,000 and 21,000 units are sold at breakeven. What is the price? What is the variable cost per unit? The contribution margin per unit? (Round answers to the nearest cent.)

Explanation / Answer

Answer:-1)-BEP sales units =115000 units

Fixed cost =$351800

Variable cost per unit =$.10 per unit

At BEP sales:- Contribution = Fixed cost

Hence Contribution =$351800

Variable cost =115000 units*$.10 per unit =$11500

Let X be selling price

115000X-$11500-$351800 = NIL

X=$11500+$351800/115000 = $363300/115000

X=$3.16 per unit

Hence Jefferson charge $3.16 per unit.

2)-Selling price per unit =$77 per unit

Fixed cost=$461000

Selling units=18500 units

Operating income =$192000

Contribution =Fixed cost + Net operating income

=$461000$+$192000 =$653000

Sales value =18500 units*$77 per unit =$1424500

Contribution = Sales – Variable cost

$653000 =$1424500- Variable cost

Variable cost =$1424500-$653000 =$771500

Variable cost per unit =$771500/18500 units =$41.70 per unit

Contribution margin ratio = Contribution/Sales *100

=$653000/$1424500*100 =45.84%

3)-Net operating income =$18240

Contribution margin ratio=.20

Actual revenue =$228000

Contribution =$228000*.20 =$45600

Net operating income =Contribution – Fixed cost

$18240 =$45600- Fixed cost

Fixed cost=$45600-$18240 =$27360

4)-Variable cost ratio =.60

Fixed cost =$108000

Break even units =21000 units

Contribution margin ratio=1- Variable cost ratio

Contribution margin ratio=1-.60 =.40

BEP sales in dollars = Fixed cost/ Contribution margin ratio

=$108000/40% =$270000

Variable cost per unit =$270000*.60/21000 units

=$162000/21000 units = $7.72 per unit

Contribution   margin per unit =$270000*.40/21000 units

= $108000/21000 units=$5.14 per unit

Selling price per unit =$270000/21000 units

=$12.86 per unit

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