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

Question

Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $18.40 per unit, and the variable labor cost is $6.60 per unit. a. What is the variable cost per unit? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Variable cost $:______?

b. Suppose NSI incurs fixed costs of $720,000 during a year in which total production is 310,000 units. What are the total costs for the year? (Do not round intermediate calculations. Round your answer to the nearest whole number, e.g., 32.) Total cost $ ____?

c. If the selling price is $46.00 per unit, what is the cash break-even point? If depreciation is $520,000 per year, what is the accounting break-even point? (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)

Cash break-even point units ____?

Accounting break-even point units _______?

Explanation / Answer

(a)VARIABLE MATERIAL COST PER UNIT =$18.40

ADD:VARIABLE LABOR COST PER UNIT=$6.60

VARIABLE COST PER UNIT =$25

(b)FIXED COST =$7,20,000

ADD:VARIABLE COST=3,10,000 UNITS*$25 PER UNIT=$77,50,000

TOTAL COST =$84,70,000

(c) CASH BREAK EVEN POINT =(FIXED COST/CONTRIBUTION PER UNIT)*SELLING PRICE PER UNIT

=($7,20,000/$46-$25)*$46

=$15,77,142.86

ACCOUNTING BREAK EVEN POINT=(FIXED COST+DEPRECIATION)/CONTRIBUTION PER UNIT

=($7,20,000+$5,20,000)/$46-$25

=$12,40,000/$21

=59,047.62 UNITS

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.