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: 540 800 940 $124,740 $ ? 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 n. n. n. n. n. n. $ 512.75 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 $690. 4. Calculate Hermosa's break-even point in units and sales revenue.

Answer 1

U complele table 800 quo in 540 Nou of bikes produced Total COSA variable COSAS fixed costs per year. $184,800 $124,700 $225,400 $350,100 $2171140 $225, 400 442,540 $225,400 $410,200 Total costs. $231 $231 239.79. $281.75 $470.79 cost per unit variable cost perunit $231. Fixed cost per unit 2 to 417.41 Total cost per unit o 648.41 002 calculation of variable cost per unit @ 540 $512.75 & hypo $124 ALO suo stro => $23) calculation of Fined cost Total cost perunit variable cost & Fixed cost per unit perunit At 800 25. 500 u 85 12.75 = 231+ fixed cost per unit in Fined cost perunit $281.75 - Nral tined cost $281.75 X 800 = $225,400 son g) calculation of contribution margin rate and contrib margin at each sale level. Particular 540 500 quo sales. ($690) a $372,600 $.648,600 Cess: variable cost $124,700) (184,800) (2171140) 431,460 contribuhon margina 247,900 367,200 CTC) contribution margin ratio 166.524 566.52% [66.5215 (a)x100 $552,000

4 a Fired cost calculation of Breat even point in units & sales Revenue Partaloon 540 800 90o. Break even point cun units) contribution per unit - $225, you (8690-231 491.06 units 120 je Break even point Infl fixed cost sales price per mit csales Revenue) contribution 109205101 - $225,400 x 690 7690-231) 03 ($338,836 per unit boots