Homework Answers
1.Contribution Margin at break even point equal fixed cost
Hence, contribution margin per unit = 345400/105000
= $3.2895
Price per unit = Contribution Margin per unit + Variable cost per unit
= $3.69 per unit
2.Contribution Margin = Net Operating income+ Fixed costs
= 169000+498000
= $667000
Total Sales = 19700*100 = $1,970,000
Variable cost per unit = (1,970,000-667000)/19700 = $66.14 per unit
CM Ratio = CM/Sales
= 667000/1970000
= 33.86%
3.CM = 245000*0.25 = $61250
Operating Income = 24500
Fixed costs = 61250-24500
= $36,750
4.Contribution Margin per unit = 131950/29000 = $4.55
Selling price per unit = CM Per unit/(1-Variable cost ratio)
= 4.55/(1-35%)
= $7 per unit
Variable cost per unit = 7*0.35 = 2.45 per unit
CM per unit = $4.55 per unit
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