Question

PA6-1 (Algo) Calculating Contribution Margin, Contribution Margin Ratio, Break- Even Point (LO 6-1, 6-2] Hermosa, Inc., produces one model of mountain bike. Partial information for the company follows: 540 790 980 $ $ Number of bikes produced and sold Total costs Variable costs Fixed costs per year Total costs Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit $129,060 ? ? ? ? ? ? ? ? ? ? ? ? $ 528.75 ? ? Required: 1. Complete the table. 2. Calculate Hermosa's contribution margin ratio and its total contribution margin at each sales level indicated in the table assuming the company sells each bike for $830. 4. Calculate Hermosa's break-even point in units and sales revenue.

Answer 1

Bookl - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View F12 A B E F G 1 Requirement - 1 Number of Bikes Produced and Sold 540 Units 790 Units 980 Units 4 Nm no 00 Total Costs : Variable Cost Fixed Cost Total Costs $ $ $ 129,060.00 $ 228,902.50 $ 357,962.50 $ 188,810.00 $ 228,902.50 $ 417,712.50 $ 234,220.00 228,902.50 463,122.50 9 10 Cost Per Unit : Variable Cost Fixed Cost 11 $ $ $ 239.00 $ 423.89 $ 662.89 $ 239.00 $ 289.75 $ 528.75 $ 239.00 233.57 472.57 12 Total Cost Per Unit 13 14 15 16 17 Less : Number of Bikes Produced and Sold Sales Revenue Variable Cost Contribution Margin Fixed Cost Operating Income 540 Units 448,200.00 $ (129,060.00) $ 319,140.00 $ (228,902.50) $ 90,237.50 $ $ $ $ $ $ 790 Units 655,700.00 $ (188,810.00) $ 466,890.00 $ (228,902.50) $ 237,987.50 $ 980 Units 813,400.00 (234,220.00) 579,180.00 (228,902.50) 350,277.50 18 19 Less : 20 21 KN Sheet1 Ready BO140 - 12:47 AM 19-Sep-20

X- Bookl - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View ♡ F32 A B D E F G 21 Requirement - 2 22 23 24 25 26 540 Units 71.20% 790 Units 71.20% 980 Units 71.20% Contribution Margin Ratio (CM Ratio = Contribution Margin / Sales Revenue) Total Contribution Margin $ 319,140.00 $ 466,890.00 $ 579,180.00 27 28 Contribution Margin per unit $ 591.00 29 30 31 387.31 rounded off to 387.00 Bikes 32 33 Requirement - 4 Break Even Units I = Fixed Cost / Contribution Margin per Unit) Break Even Sales Revenue ( = Fixed Cost / Contribution Margin Ratio) 321,470.52 rounded off to 321,471.00 34 35 36 37 38 39 40 41 K Sheet1 Ready BOI 140% - 1 12:48 AM 19-Sep-20

For Break Even Sales in Dollars if we consider formula - Break Even Sales in Units x Sales Revenue, then the answer will be 387 x 830 = $ 321,210

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