Question

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

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)

Solution of two independent questions :-

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

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