Question

Presidio, Inc., produces one model of a 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 table assuming the company sells each bike for $630.
3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of $630.

Complete Presidio’s cost data table. (Round your Cost per Unit answers to 2 decimal places.)

places (i.e. .1234 should be entered as 12.34%.))

Calculate net operating income (loss) at each of the sales levels assuming a sales price of $630. (Round your answers to the nearest whole dollar amount.)

3.
	720 Units 750 Units 1,248 Units Net Operating Income

2.
	720 Units 750 Units 1,248 Units Total Contribution Margin Contribution Margin Ratio % % %

1.
	Bikes Produced and Sold 720 Units 750 Units 1,248 Units Total costs Variable costs $180,000 Fixed costs per year Total costs $180,000 $0 $0 Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit $0.00 $544.00 $0.00

Answer 1

1.)				Amount $
	Bikes Produced and Sold	720 Units	750 Units	1,248 Units
	Total costs
	Variable costs	180,000	187,500	312,000
	Fixed costs per year	220,500	220,500	220,500
	Total costs	400,500	408,000	532,500
	Cost per unit
	Variable cost per unit	250.00	250.00	250.00
	Fixed cost per unit	306.25	294.00	176.68
	Total cost per unit	556.25	544.00	426.68
	Working:
	Bikes Produced and Sold	720 Units	750 Units	1,248 Units
	Total costs
	Variable costs	180,000	=750*250	=1248*250
	Fixed costs per year	220,500	=408000-187500	2,20,500
	Total costs	=180000+220500	=750*544	=220500+312000
	Cost per unit
	Variable cost per unit	=180000/720	=187500/750	=312000/1248
	Fixed cost per unit	=220500/720	=220500/750	=220500/1248
	Total cost per unit	=250+306.25	544.00	=250+176.68
2.)		720 Units	750 Units	1,248 Units
	Total Contribution Margin $	273,600	285,000	474,240
	(Selling price per unit - Variable Cost per unit ) x unit solds
	Contribution Margin Ratio	60.32%	60.32%	60.32%
	( Contribution margin / Sales )
	Working
		720 Units	750 Units	1,248 Units
	Total Contribution Margin	=(630-250)*720	=(630-250)*750	=(630-250)*1248
	Contribution Margin Ratio	=273600/(720*630)	=285000/(750*630)	=474240/(1248*630)
3.)		720 Units	750 Units	1,248 Units
	Net Operating income	53,100	64,500	253,740
	( Contribution margin - Fixed Costs )
	Working
		720 Units	750 Units	1,248 Units
	Net Operating income	=273600-220500	=285000-220500	=474240-220500