Question

Required Information [The following information applies to the questions displayed below.] Perez Company makes and sells products with variable costs of $24 each. Perez incurs annual fixed costs of $393,000. The current sales price is $99. Note: The requirements of this question are interdependent. For example, the $300,000 desired profit introduced in Requirement c also applies to subsequent requirements. Likewise, the $80 sales price introduced in Requirement d applies to the subsequent requirements. Required a. Determine the contribution margin per unit. Contribution margin per unit

for which one i belive that is all the information

Answer 1

a.Contribution Margin per unit = Selling price per unit – variable cost per unit

= 99-24

= $75 per unit

Break even point in units = Fixed costs/Contribution margin per unit

= 393000/75

= 5,240 units

In Sales dollars = 5240*99 = $518,760

Contribution format Income statement
Sales Revenues	518760
Less: Variable costs	125760
Contribution Margin	393000
Less: Fixed costs	393000
Operating Income	0

c.Units required = (Desired Income + Fixed costs)/Contribution margin per unit

= (300,000+393000)/75

= 9,240 units

Sales dollars = 9240*99 = $914,760

Contribution format Income statement
Sales Revenues	914760
Less: Variable costs	221760
Contribution Margin	693000
Less: Fixed costs	393000
Operating Income	300000

Units required = (300,000+304,000)/75 = 8053.33 units

i.e. 8054 units

Sales dollars = 604,000*99/75

= $797,280

Contribution format Income statement
Sales Revenues	797280
Less: Variable costs	193280
Contribution Margin	604000
Less: Fixed costs	304000
Operating Income	300000

g.

Margin of safety in units = Sales units – break even units

= 12400 – 304000/(80-30)

= 6,320 units

In Dollars = 6320*80 = $505,600

% = 6320/12400 = 50.97%

i.e. 51%