Question

Presidio, Inc. produces one model of mountain bike. Partial information for the company ollows Required: 1. Complete Presidio's cost data table. (Round your Cost per Unit answers to 2 decim places.) Bikes Produced and Sold 450 Units 910 Units Total costs 16a Units Variable costs S 144,000 Fixed costs per year Total costs 144.000 Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit 0.00 S 53800 S 0.00 2. sales level indicated in the cost data table assuming the company sells each bike for (Round your Margin Ratio percentage answers to 2 decimal places (le. .1234 should be entered as 12.34%.)) Calculate Presidio's contribution margin ratio and its total contribution margin at each $640 450 Units 910 Units 1628 Units Total Contribution Margin Contribution Margin Ratio 3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of Shan (Round vour answers to the nearest whole dollaramount.)

Presidio, Inc. produces one model of mountain bike. Partial information for the company follows:

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



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 $640. (Round your Margin Ratio percentage answers to 2 decimal places (i.e. .1234 should be entered as 12.34%.))



3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of $640. (Round your answers to the nearest whole dollar amount.

Answer 1

(1) Cost Data Table :-

	450 Units	910 Units	1628 Unts
Total Costs
Variable cost	144000	(910 * 320) = 291200	(1628 * 320) = 520960
Fixed cost per year	198380**	198380**	198380**
Total Costs	342380	489580	719340
Cost per unit
Variable cost pu	320*	320*	320*
Fixed cost pu	440.84	218	121.86
Total cost pu	760.84	538	441.86

*Variable cost per unit = $144000/450 units = $320

VC per unit will remain same

**Fixed Cost :-

In 910 Units:-

Cost pu = $538

Total Cost = $538 * 910 units = $489580

Variable cost for 910 units = 910 units * $320 = $291200

Fixed Cost = Total cost – Variable cost

       = 489580 – 291200 = 198380

Fixed cost will remain same in all the above cases irrespective of the no of units produced & sell

(2) Contribution Margin Ratio & its Total contribution Margin :-

	450 Units	910 Units	1628 Units
Total contribution Margin	144000	291200	520960
Contribution Margin Ratio	50%	50%	50%

SP pu = $640

Contribution Margin = Sale Value – Variable cost

Contribution Margin Ratio = (Contribution Margin / Sale Value) * 100

	450 Units	910 Units	1628 Units
Sale value                                 (A)	(450 * $640) =288000	(910 * $640) =582400	(1628 * $640) =1041920
(-) Variable Cost	144000	291200	520960
Contribution Margin              (B)	144000	291200	520960
Contribution Margin Ratio (B/A)	(144000/288000) * 100 =50%	(291200/582400) * 100 =50%	(520960/1041920)*100 =50%

(3) Net Operating Income (Loss) :-

Net Operating Income (Loss) = Sals value – VC – Fixed cost

	450 Units	910 Units	1628 Units
Sale value	(450 * $640) =288000	(910 * $640) =582400	(1628 * $640) =1041920
(-) Variable Cost	144000	291200	520960
Contribution Margin	144000	291200	520960
(-) Fixed Cost	198380	198380	198380
Net Operating Income (Loss)	(54380)	92820	322580