Question

Hermosa, Inc., produces one model of mountain bike. Partial information for the company follows: Number of...

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

Homework Answers

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
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