Question

Malden Corporation has annual fixed costs of \$2,000,000, variable costs of \$40 per unit and a...

Malden Corporation has annual fixed costs of \$2,000,000, variable costs of \$40 per unit and a selling price of \$100 per unit. What is Malden’s breakeven point in units?

Bluff Corporation has a selling price per unit of \$20 and a variable cost per unit of \$12. What is Bluff’s contribution margin per unit in dollars and what is its contribution margin in percentage terms?

Dexter Corporation projects the following units and selling prices:

Year 1 Year 2 Year 3 Year 4

Unit sales 1,000 1,500 2,000 3,000

Selling price per unit \$10 \$12 \$15 \$18

Please calculate Dexter’s projected or proforma sales.

Continuing from the prior problem, Dexter has the following fixed cost per year and variable cost per unit each year:

Year 1 Year 2 Year 3 Year 4

Annual fixed costs \$2,000 \$2,100 \$2,200 \$2,400

Variable costs per unit \$5 \$6 \$8 \$9

1. Malden’s breakeven point in units
= 2,000,000 / (100 - 40)
= 33,333 units

2. Bluff’s contribution margin per unit in dollars
= 20 - 12
= \$ 8

Bluff’s contribution margin per unit in dollars
= 8 / 20
= 40%

3.

 Year 1 Year 2 Year 3 Year 4 Unit sales 1,000 1,500 2,000 3,000 Selling price per unit \$10 \$12 \$15 \$18 Sales \$10,000 \$18,000 \$30,000 \$54,000 Variable costs per unit \$5 \$6 \$8 \$9 Less: Variable costs -\$5,000 -\$9,000 -\$16,000 -\$27,000 Contribution Margin \$5,000 \$9,000 \$14,000 \$27,000 Less: Annual fixed costs \$2,000 \$2,100 \$2,200 \$2,400 Net Income (loss) \$3,000 \$6,900 \$11,800 \$24,600

Earn Coins

Coins can be redeemed for fabulous gifts.