Question

Hermosa, Inc., produces one model of mountain bike. Partial information for the company follows: Number of bikes produced and sold 480 820 970 Total costs Variable costs $ 115,680 $ ? $ ? Fixed costs per year ? ? ? Total costs ? ? ? Cost per unit Variable cost per unit ? ? ? Fixed cost per unit ? ? ? Total cost per unit ? $ 534.75 ? Required: 1. Complete the table. (Round your "Cost per Unit" answers to 2 decimal places.) 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 $800. (Round your percentage answers to 2 decimal places. (i.e. .1234 should be entered as 12.34%.)) 4. Calculate Hermosa’s break-even point in units and sales revenue. (Round your answers to the nearest whole number.) ReferenceseBook & Resources

Answer 1

Number of Bikes Produced	480	820	970
Total Costs
Variable Costs	$115,680.00	$197,620.00	$233,770.00
Fixed Costs Per Year	$240,875.00	$240,875.00	$240,875.00
Total Costs	$356,555.00	$438,495.00	$474,645.00
Cost Per Unit
Variable Cost Per Unit	$241.00	$241.00	$241.00
Fixed Cost Per Unit	$501.82	$293.75	$248.32
Total Cost Per Unit	$742.82	$534.75	$489.32
2
	480	820	970
Contribution Margin Ratio	69.88%	69.88%	69.88%
Total Contribution Margin	268320	458380	542230
3
Break Even Units =240875/(800-241)= 431
Sales Revenue =240875/69.88%= $344698 or $344723