Answer :
1. Calculation of Total Fixed Cost & Variable Cost
Fixed % | Variable% | Fixed Cost | Variable Cost | ||
Cost of Goods Sold | $ 18,36,000 | 40% | 60% | $ 7,34,400 | $ 11,01,600 |
Selling Expenses | $ 9,18,000 | 50% | 50% | $ 4,59,000 | $ 4,59,000 |
Administrative Expenses | $ 5,44,000 | 70% | 30% | $ 3,80,800 | $ 1,63,200 |
Total | $ 32,98,000 | $ 15,74,200 | $ 17,23,800 |
As per above table :
Total Fixed Cost $ 15,74,200
Total Variable Cost $17,23,800
2(a) .
Unit Variable Cost = Total Variable Cost / Number of Units Sold
= $ 17,23,800 / 1,01,400 Units
= $ 17 per unit
2(b)
Unit Contribution Margin = Selling Price per unit - Variable Cost per unit
= $51 - $17
= $34
3. Break Even Sales in Units for Current Year
Break-Even Point = Fixed Costs / (Sales Price Per Unit - Variable Costs Per Unit)
= $ 15,74,200 / ( $51- $17)
= 46,300 Units
4.
Sales in proposed program = $ 5,171,400 + $ 4,59,000
Fixed Cost in proposed program = $ 15,74,200 + $ 61,200
Break-Even Point = Fixed Costs / (Sales Price Per Unit - Variable Costs Per Unit)
=$16,35,400 / ( $51 - $17)
= $48,100
Note: Change in total sales does not result in Change in Selling price per unit.
5. 35,000 Units needs to sell in proposed program to realize profit of $18,73,400.
Selling Units = Total Sales / Per unit selling price
= $ 17,85,000 / $51
= 35,000 Units
Sr.No | Total | Per Unit | Steps | |
(i) | Sales (iii-ii) | $ 17,85,000 | $ 51 | 5 |
(ii) | Variable Costs (Remain Same) | $ 17,23,800 | $ 17 | 4 |
(iii) | Contribution Margin (iv + v) | $ 35,08,800 | $ 34 | 3 |
(iv) | Fixed Costs | $ 16,35,400 | 2 | |
(v) | Net Income | $ 18,73,400 | 1 |
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