Homework Answers
1. Contribution margin per unit = selling price per unit - variable cost per unit
= 64-38 = 26
2. Contribution margin formula= Toatal sales revenue- cost to make product/Toatal sales revenue
Annual volume=28000
64*28000-38*28000/1792000
1792000-1064000/1792000= 0.40625
= 40.625
3.Break even units = Fixed cost/SP-VC
=304000/64-38
= 11693 units
In dollars = 11693*64=748352
4. Profit earned =
Sales 1792000
Less: variable cost 1064000
Contribution 728000
Less: Fixed cost 304000
Less: selling admin exp 280000
Profit = 144000.
5.New fixed cost = 454000
Breake even point = 454000/64-38
= 17452units
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