Question

Presidio, Inc., produces one model of mountain bike. Partial information for the company follows: Required: 1. Complete Presidio's cost data table. 2. Calculate Presidio's contribution margin ratio and its total contribution margin at each sales level indicated in the cost data tabl assuming the company sells each bike for $620. 3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of $620. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Complete Presidio's cost data table. (Round your Cost per Unit answers to 2 decimal places.) 730 Units 790 Units 1,624 Units Bikes Produced and Sold Total costs Variable costs Fixed costs per year Total costs 1825001

Answer 1

Requirement (1)

Given:
For 730 units
Total Variable costs (VC)	182500
Therefore, VC per unit	250
(182500 / 730)
Give,
For 790 units
Total cost per unit	560
VC (as determined above)	250
Therefore, balance Fixed cost	310
(560-250)
Therefore, Total Fixed cost	244900
(310 * 790)
Therefore, on the basis of the above computations, let us now complete the table
Bikes Produced and Sold	730 units	790 units	1624 units
Total Costs
Variables costs (VC)	182500	197500	406000
	(given)	(250*790)	(250*1624)
Fixed Cost (FC)	244900	244900	244900
Total Costs (VC + FV)	427400	442400	650900
Cost per unit
Variables costs (VC) per unit	250	250	250
Fixed Cost (FC) per unit	335.48	310.00	150.80
	(244900/730)	(244900/790)	(244900/1624)
Total Costs (VC + FV) per unit	585.48	560.00	400.80

Requirement (2)

Particulars	730 units	790 units	1624 units
Selling price per unit (given)	620	620	620
Therefore, Total Sales (620 * units)	452600	489800	1006880
Less: Total VC	182500	197500	406000
Therefore, Contribution Margin	270100	292300	600880
(Total Sales - Total VC)
Contribution Margin Ratio	59.68%	59.68%	59.68%
(Contribution Margin / Total Sales)

Requirement (3)

Particulars	730 units	790 units	1624 units
Selling price per unit (given)	620	620	620
Therefore, Total Sales	452600	489800	1006880
Less: Total VC	182500	197500	406000
Less: Total FC	244900	244900	244900
Therefore, Net Operating Income	25200	47400	355980
(Total Sales - Total VC - Total FC)