Homework Answers
1. Per Unit Variable Cost = Variable Cost / Units
= $ 1,086,800 / 130,000 Units
= $ 8.36 Per Unit
Contribution Margin per unit = Selling price per unit - Per Unit Variable Cost
= $ 22 - $ 8.36
= $ 13.64
Contribution Margin ratio = Contribution Margin per unit / Selling Price Per Unit * 100
= $ 13.64 / $ 22 *100
= 0.62
2.Break Even Sales = Fixed Cost / Contribution Margin ratio
= $ 8,000,000 / 0.62
= $ 12,903,226
3.
Required Contribution Margin = Fixed Cost + Required Profit
= $ 8,000,000 + $ 245,000
= $ 8,245,000
Contribution Margin ratio = 0.62
Hence, Sales revenue required = Required Contribution Margin / Contribution Margin ratio
= $ 8,245,000 /0.62
= $ 13,298,387.10
= $ 13,298,387
4.
a. Contribution Margin per unit = Selling price per unit - Per Unit Variable Cost
= $ 23.50 - $ 8.36
= $ 15.14
b. Contribution Margin ratio = Contribution Margin per unit / Selling Price Per Unit * 100
= $ 15.14/ $ 23.5 *100
= 0.6443
c.
Break Even Sales = Fixed Cost / Contribution Margin ratio
= $ 8,000,000 / 0.6443
= $ 12,416,576
d.
Required Contribution Margin = Fixed Cost + Required Profit
= $ 8,000,000 + $ 245,000
= $ 8,245,000
Contribution Margin ratio = 0.6443
Hence, Sales revenue required = Required Contribution Margin / Contribution Margin ratio
= $ 8,245,000 /0.6443
= $ 12,796,834
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