Question

BOOK Calculator Print Item Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the following independent situations, calculate the amount(s) required. Unless otherwise instructed, round all total dollar figures (e.g. sales, total contribution margin) to the nearest dollar, breakeven or target units to the nearest unit, and unit costs and unit contribution margins to the nearest cent. Round ratios to four significant digits. Required: 1. At the break-even point, Jefferson Company sells 115,000 units and has fixed cost of $349,600. The variable cost per unit is $4.56. What price does Jefferson charge per unit? Round your answer to the nearest cent. 2. Sooner Industries charges a price of $120 and has fixed cost of $458.000. Next year Sooner expects to sell 15, 600 units and make operating income of $165,000.. What is the variable cost per unit? What is the contribution margin ratio? Enter the contribution margin rate as a percentage rounded to two decimal places. Variable cost per unit Contribution margin ratio 3. Last year, Jasper Company earned operating income of $22,500 with a contribution margin ratio of 025. Actual revenue was 5235,000. Calculate the total fixed cost. 4. Laramie Company has variable cost ratio of 0.56. The fixed cost is $103,840 and 28.600 units are sold at breakeven. What is the price? What is the variable cost per unit? The contribution margin per unit? (Round answers to the nearest cent Price Variable cost per unit Previous Next Check My Work Save and Exit Submit Assignment for Grading 602 PM

Answer 1

1) At break even point sales is equal to expense (both variable and fixed expenses). That means,

Selling price per unit= Variable cost per unit+Fixed cost per unit

Fixed cost per unit= Total fixed cost/Number of units

= $349600/115000= $3.04

Selling price per unit= Variable cost per unit+Fixed cost per unit

= $4.56+3.04= $7.60 per unit

2) Operating income= Sales-Variable cost-Fixed costs

$166000= $120*15600-Variable cost-458000

$166000= $1872000-Variable cost-458000

Variable cost= $1248000

Variable cost= Number of units*Variable cost per unit

$1248000= 15600*Variable cost per unit

Variable cost per unit= $80

Contribution margin per unit= Sales price per unit-Variable cost per unit

= $120-80= $40

Contribution margin ratio= Contribution margin*100/Sales

= $40*100/120= 33.33%

3) Contribution margin= Contribution margin ratio*Actual revenue

= 0.25*$235000= $58750

Fixed cost= Contribution margin-Operating income

= $58750-22500= $36250

4) At break even point sales is equal to expense (both variable and fixed expenses). That means,

Selling price per unit= Variable cost per unit+Fixed cost per unit

Let Selling price per unit= X

23600*X= 23600*X*0.56+103840

23600X= 13216X+103840

10384X= $103840

X= $10

X= Selling price per unit= $10

Variable cost per unit= $10*0.56= $5.60

Contribution margin per unit= Sales price per unit-Variable cost per unit

= $10-5.60= $4.40 per unit