Question

The following information is available for a company’s manufacturing over the last twelve months:

Month	Units Produced	Manufacturing Cost
January	32,250	$63,400
February	34,400	$67,000
March	34,000	$66,300
April	35,100	$68,200
May	33,240	$64,200
June	28,500	$59,280
July	29,000	$60,000
August	27,900	$57,800
September	24,450	$52,400
October	25,300	$53,100
November	26,500	$54,560
December	27,900	$55,900

Based on the high-low method, what is the variable and fixed cost component of total manufacturing cost?

Variable cost per unit (round your answer to 2 decimal places): $

Fixed cost (round your answer to 2 decimal places if neessary): $

QUESTION 2

Balloons, Inc. manufactures a single product that sells for $68 per unit and whose total variable costs are $33 per unit. The company’s annual fixed costs are $431,400.

What is the contribution margin per unit? Round to the nearest cent (2 decimal places)

What is the contribution margin ratio? Make sure to include the percentage (%) sign in your answer and round to 2 decimal places.

What is the break-even point in units? Round to the nearest whole unit (no decimals)

What is the break-even point in sales dollars? Round to the nearest cent (2 decimal places)

Answer 1

Solution of two independent questions :-

Answer 1:-

Variable cost per unit = ( Cost at the highest level of activity - Cost at the lowest level of activity ) / ( highest level of activity - lowest level of activity )

( 68200 - 52400 ) / ( 35100 - 24450 ) = 15800 / 10650 = $ 1.48 per unit

Fixed cost = 68200 - ( 35100 * 1.48 ) = $ 16252

Answer 2:-

What is the contribution margin per unit? SP 68 - VC 33 = $ 35 per unit

What is the contribution margin ratio? contribution margin per unit 35 /  SP 68 = 51.47 %

What is the break-even point in units? FC 431400 / contribution margin per unit 35 = 12326 units

What is the break-even point in sales dollars? FC 431400 / contribution margin ratio 0.5147 = $ 838158.15