Question

Given the following information for Baugh Company:        Total fixed costs                       $78,000  &nb

Given the following information for Baugh Company:

       Total fixed costs                       $78,000

       Unit variable costs                          $24

       Unit selling price                            $36

Required:

a.    Compute the contribution margin per unit.

b.    Compute the contribution-margin ratio.

c.    Compute the break-even point in units.

d.           Compute the break-even volume in dollars

Business   Accounting   
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Homework Answers

Answer #1

Ans a: Contribution margin per unit= $12

Computation:

Formula: Sales price per unit- variable cost per unit

=36-24

=$12

Ans b: Contribution margin ratio: 33.33%

Computation:

Formula: Contribution margin/ Selling price per unit

= 12/36*100

= 0.3333 or 33.33%

Ans c: Break-even point in units: 6500 units

Computation:

Formula: Fixed cost/contribution margin

=78,000/12

= 6500 units

Ans d :Break-even volume in dollars: $234,023 or $234,000( if rounded up)

​​​​​​​Computation:

Formula: Fixed cost/CM %

=78,000/33.33%

=$234,023 or $234,000( if rounded up)

=$234,000

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