Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials

Question

Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $10.90 per unit, and the variable labor cost is $7.10 per unit.

What is the variable cost per unit? (Round your answer to 2 decimal places. (e.g., 32.16))

Suppose NSI incurs fixed costs of $820,000 during a year in which total production is 360,000 units. What are the total costs for the year?

If the selling price is $48.50 per unit, what is the cash break-even point? If depreciation is $620,000 per year, what is the accounting break-even point? (Round your answers to 2 decimal places. (e.g., 32.16))

Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $10.90 per unit, and the variable labor cost is $7.10 per unit.

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Variable Cost Per Unit = 10.9 + 7.10 = 18 per unit

Part B:

Total Costs = 360000*18 + 820000 = 7300000

Part C:

Accounting Break Even Point = Fixed Cost + Depreciation/Contribution = (820000 + 620000)/(48.50 -18) = 47213.11

Cash Break Even = Fixed Cost/Contribution = 820000/(48.50-18) = 26885.25

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