Homework Answers
All figures are in $ as specified in question
selling price 50 per unit
forecast output 20,000 units
sales = 20,000 * 50 = 10,00,000
fixed cost = 300,000
variable cost = 20 per unit * 20,000 units = 4,00,000
sales - variable cost = contribution
contribution - fixed cost = profit
| sales | 1,000,000 |
| less: variable cost | 400,000 |
| contribution | 600,000 |
| less: fixed cost | 300,000 |
| profit |
300,000 |
| 1. breakeven point= fixed cost / (selling price per unit - variable cost per unit) | |||||
| sp per unit= 50 | |||||
| variable p unit= 20 | |||||
| therefore, breakeven point = 300000/(50-20) = 300000/30= 10000 units | |||||
| 2. profit = 300000 as calculated in above table | |||||
| 3. margin of safety= sales - breakeven sales = 20000-10000 = 10000 units | |||||
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** Please show work and formulas
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for Ralston Manufacturing Company,
which has a normal capacity per period of 400,000 units
of product that sell for $18 each. For the
foreseeable future, regular sales volume should continue
at normal capacity of production
Solution 6.1
y-intercept 5 Total fixed costs of $5.000
Slope 5 Variable cost per unit of approximately $0.50
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Total cost 5 ($0.50 3 # of water bottle cages) 1
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