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Hermosa, Inc., produces one model of mountain bike. Partlal information for the company follows: Number of bikes produced and
Hermosa, Inc., produces one model of mountaln bike. Partial information for the company follows: Number of bikes produced and
Hermosa, Inc., produces one model of mountalin bike. Partial information for the company follows: Number of bikes produced an
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Answer #1
Required 1 :
Number of bikes produced and sold 460 units 750 units 920 units
Calculation Answer Calculation Answer Calculation Answer
Total costs
   Variable costs 109020 (237*750) 177750 (237*920) 218040
   Fixed costs per year 217313 (395063-177750) 217313 217313
Total costs 326333 (526.75*750) 395063 435353
Cost per unit
   Variable cost per unit (109020/460) 237 237 237
   Fixed costs per unit (217313/460) 472.42 (526.75-237) 289.75 (217313/920) 236.21
Total cost per unit 709.42 526.75 473.21
Required 2 :
460 units 750 units 920 units
Sales ( Sales price per unit * Units ) 354200 577500 708400
460 units 750 units 920 units
Contribution margin ratio ( Total contribution margin / Sales ) 69.22% 69.22% 69.22%
Total contribution margin ( Sales - Total variable cost ) 245180 399750 490360
Required 4 :
Break-even units = Total fixed costs / ( Sales price per unit - variable cost per unit ) = 217313 / ( 770 - 237 ) 408 Bikes
Break-even sales revenue = Total fixed costs / Contribution margin ratio = 217313 / 69.22% 313945
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