Homework Answers
| Computation of Variable cost per Unit using High Low Method |
| Variable cost per Unit= ( Cost at Highest Volume- Cost at Lowest Volume)/( Highest olume- Lowest Volume) |
| =(675000-607500)/(70000-55000)= $4.50 |
| Fixed Cost = $675000-(70000X4.50)=$360000 |
| Contribution Magin per Unit= (Sales- Variable cost per Unit) |
| =(10-4.50)=$5.5 per unit |
| Part-a |
| BEP = Fixed Cost / Contribution Margin per Unit |
| =360000/$5.5=65455 |
| Part-b:-margin of ssafety= Actual sales- BEP Sales |
| 68000 Unit- 65455 Unit=2545 Unit |
| Part-c: Sales required to achieve target Profit |
| Contribution Required= Fixed Cost + Target Profit |
| $360000+40000=$400000 |
| Required Sales= Contribution required/ Contribtion per unit |
| =$400000/$5.5=72727 Unit |
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