Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the...

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Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the following indepe

4. Laramie Company has variable cost ratio of 0.40. The fixed cost is $180,000 and 30,000 units are sold at break-even. What

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Answer 1

Answer #1

1.

Break even point = Fixed costs / Contribution margin per unit
135000 = 350600 / Contribution margin per unit
Contribution margin per unit = 350600 / 135000	2.60

Price per unit = Variable cost per unit + Contribution margin per unit = 0.40 + 2.60	3.00

2.

Expected sales units = ( Fixed costs + Operating income ) / Contribution margin per unit
13500 = ( 459500 + 162000 ) / Contribution margin per unit	621500
13500 = 621500 / Contribution margin per unit
Contribution margin per unit = 621500 / 13500	46.04

Variable cost per unit = Selling price per unit - Contribution margin per unit = 115 - 46.04	68.96

Contribution margin ratio = Contribution margin per unit / Selling price per unit = 46.04 / 115	40.03%

3.

Operating income = ( Actual revenue * Contribution margin ratio ) - Total fixed costs
24200 = ( 242000 * 0.25 ) - Total fixed costs
24200 = 60500 - Total fixed costs
Total fixed costs = 60500 - 24200	36300

4.

Break even point = Fixed costs / Contribution margin per unit
30000 = 180000 / Contribution margin per unit
Contribution margin per unit = 180000 / 30000	6.00

Contribution margin ratio = 1 - Variable cost ratio = 1 - 0.40	0.60

Price = Contribution margin per unit / Contribution margin ratio = 6.00 / 0.60	10.00

Variable cost per unit = Price - Contribution margin per unit = 10.00 - 6.00	4.00

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Answer 2

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