Question

Presidio, Inc., produces one model of mountain bike. Partial information for the company follows:

Required:
1. Complete Presidio’s cost data table.
2. Calculate Presidio’s contribution margin ratio and its total contribution margin at each sales level indicated in the cost data table assuming the company sells each bike for $650.
3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of $650.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2
• Required 3

Complete Presidio’s cost data table. (Round your Cost per Unit answers to 2 decimal places.)

	Bikes Produced and Sold 730 Units 790 Units 1,070 Units Total costs Variable costs $182,500 Fixed costs per year Total costs Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit $534.00

Answer 1

1.

	Bikes Produced and Sold	730 Units	790 Units	1,070 Units
	Total costs
	Variable costs	$182,500	$197,500.00	$   267,500.00
	Fixed costs per year ($284*790)	$224,360.00	$224,360.00	$224,360.00
	Total costs	$406,860	$421,860.00	$491,860
	Cost per unit
	Variable cost per unit ($182500/730)	$250	$250	$250
	Fixed cost per unit	$307.34	$284.00*	$209.68
	Total cost per unit	$557	$534.00	$460
	*Fixed cost per unit = Total Cost per unit - Variable Cost per unit
	Computation of contribution margin at each sales level, if selling price is $650

2.

	Bikes Produced and Sold	730 Units	790 Units	1,070 Units
	Selling price per unit	$650	$650	$650
	Less: Variable cost per unit	$250	$250	$250
	Contribution Margin	$400	$400	$400
	Contribution Margin ratio ($400*100/$650)	61.54%	61.54%	61.54%
	Total Contribution ($400* units sold)	$292,000	$316,000	$428,000

3.

	Computation of net operating income (loss) at each levels
	Bikes Produced and Sold	730 Units	790 Units	1,070 Units
	Total Contribution ($400* units sold)	292000	316000	428000
	Less: Fixed Cost	$224,360.00	$224,360.00	$224,360.00
	Net Income/(loss) [Contribution - Fixed Cost]	$67,640.00	$91,640.00	$203,640.00