Homework Answers
Fixed cost in March = $5,000 - (120 X $11) = $3,680
| Months | April | May | June | July |
| Number of units sold | 160 | 70 | 170 | 80 |
| Total variable cost | $1,760 | $770 | $1,870 | $880 |
| Total fixed cost | $3,680 | $3,680 | $3,680 | $3,680 |
| Total salary cost | $5,440 | $4,450 | $5,550 | $4,560 |
1 & 2
| Miles | Total annual | |
| Driven | Cost | |
| High level activity | 120,000 | $1,392,000 |
| Low level activity | 80,000 | $1,088,000 |
| Change | 40,000 | $304,000 |
| Variable cost per mile | $7.60 | Per unit |
| Fixed cost per year | 480,000 |
3.
Total annual cost = ($7.60 X 100,000) + $480,000 = $1,240,000
Req. A to B
| a. | Breakeven point in units | 9,000 |
| Breakeven point in dollars | $1,800,000 | |
| b. | Contribution margin per unit | $80 |
| Breakeven point in units | 9,000 | |
| Breakeven point in dollars | $1,800,000 |
Req C
| Sales | $1,800,000 |
| Variable cost | $1,080,000 |
| Contribution margin | $720,000 |
| Fiction cost | $720,000 |
| Net operating income | $0 |
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