Question

PA6-1 Calculating Contribution Margin, Contribution Margin Ratio, Break-Even Point [LO 6-1, 6-2]

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

Number of bikes produced and sold | 520 | 850 | 950 | |||

Total costs | ||||||

Variable costs | $ | 129,480 | $ | ? | $ | ? |

Fixed costs per year | ? | ? | ? | |||

Total costs | ? | ? | ? | |||

Cost per unit | ||||||

Variable cost per unit | ? | ? | ? | |||

Fixed cost per unit | ? | ? | ? | |||

Total cost per unit | ? | $ | 523.75 | ? | ||

**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.)**

Answer #1

1) Complete table :

Number of bikes produced and sold | 520 | 850 | 950 |

Total Cost | |||

Variable cost | 129480 | 249*850 = 211650 | 249*950 = 236550 |

Fixed cost | 233537.50 | 233537.50 | 233537.50 |

Total Cost | 363017.50 | 523.75*850 = 445187.50 | 470087.50 |

Cost per unit | |||

Variable cost per unit | 129480/520 = 249 | 249 | 249 |

Fixed cost per unit | 449.11 | 274.75 | 245.83 |

Total cost per unit | 698.11 | 523.75 | 494.83 |

**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.

520 | 850 | 950 | |

Contribution margin ratio | (800-249/800) = 68.88% | 68.88% | 68.88% |

Total Contribution margin | 551*520 = 286520 | 551*850 = 468350 | 551*950 = 523450 |

4) Break even point = 233537.50/551 = 424 Units

Break even sales = 424*800 = $339200

Hermosa, Inc., produces one model of mountain bike. Partial
information for the company follows:
Number of bikes produced and sold
520
800
920
Total costs
Variable costs
$
121,160
$
?
$
?
Fixed costs per year
?
?
?
Total costs
?
?
?
Cost per unit
Variable cost per unit
?
?
?
Fixed cost per unit
?
?
?
Total cost per unit
?
$
508.75
?
Required:
1. Complete the table. (Round
your "Cost...

Hermosa, Inc., produces one model of mountain bike. Partial
information for the company follows:
Number of bikes produced and sold
500
820
960
Total costs
Variable costs
$
118,500
$
?
$
?
Fixed costs per year
?
?
?
Total costs
?
?
?
Cost per unit
Variable cost per unit
?
?
?
Fixed cost per unit
?
?
?
Total cost per unit
?
$
518.75
?
Required:
1. Complete the table. (Round
your "Cost...

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"...

E6-10 (Algo) Calculating Contribution Margin, Contribution
Margin Ratio, Margin of Safety [LO 6-2, 6-3]
Last month, Laredo Company sold 540 units for $70 each. During
the month, fixed costs were $4,704 and variable costs were $42 per
unit.
Required:
1. Determine the unit contribution margin and
contribution margin ratio.
2. Calculate the break-even point in units and
sales dollars.
3. Compute Laredo’s margin of safety in units
and as a percentage of sales.
Complete
this question by entering your answers...

Break-Even Units, Contribution Margin Ratio, Multiple-Product
Breakeven, Margin of Safety, Degree of Operating Leverage
Jellico Inc.'s projected operating income (based on sales of
450,000 units) for the coming year is as follows:
Total
Sales
$11,700,000
Total variable cost
8,190,000
Contribution margin
$3,510,000
Total fixed cost
2,254,200
Operating income
$1,255,800
Required:
1(a). Compute variable cost per unit. Round
your answer to the nearest cent.
$per unit
1(b). Compute contribution margin per unit.
Round your answer to the nearest cent.
$per unit...

Required:
1. Complete Presidio’s cost data table.
(Round your Cost per Unit answers to 2 decimal
places.)
Bikes Produced and sold 470 units 850 units 1534 units
Total cost .
Variable cost . 150400 ____ _____.
fixed per yer ____ _____. ______
total costs ______ _____ ______
cost per unit
variable cost per unit ______ _______ ______
fixed cost per unit _____ ______ ____________
total cost per unit _______. 540.00_. ___________
2. Calculate Presidio’s contribution margin ratio
and its...

Break-Even Units, Contribution Margin Ratio, Multiple-Product
Breakeven, Margin of Safety, Degree of Operating Leverage
Jellico Inc.'s projected operating income (based on sales of
450,000 units) for the coming year is as follows:
Total
Sales
$ 11,700,000
Total variable cost
6,669,000
Contribution margin
$ 5,031,000
Total fixed cost
2,871,024
Operating income
$ 2,159,976
Required:
1(a). Compute variable cost per unit. Enter
your answer to the nearest cent.
$per unit
1(b). Compute contribution margin per unit.
Enter your answer to the nearest...

Break-Even Units, Contribution Margin Ratio, Multiple-Product
Breakeven, Margin of Safety, Degree of Operating Leverage
Jellico Inc.'s projected operating income (based on sales of
450,000 units) for the coming year is as follows:
Total
Sales
$ 11,700,000
Total variable cost
7,371,000
Contribution margin
$ 4,329,000
Total fixed cost
2,705,144
Operating income
$ 1,623,856
1(a). Compute variable cost per unit. Enter
your answer to the nearest cent.
$per unit
1(b). Compute contribution margin per unit.
Enter your answer to the nearest cent....

Contribution Margin Ratio, Variable Cost Ratio, Break-Even Sales
Revenue
The controller of Sandoval Company prepared the following
projected income statement:
Sales
$90,000
Total Variable cost
79,000
Contribution
margin
$11,000
Total Fixed cost
6,500
Operating income
$4,500
Required:
1. Calculate the contribution margin ratio.
Round your answer to the nearest whole number.
%
2. Calculate the variable cost ratio. Round
your answer to the nearest whole number.
%
3. Calculate the break-even sales revenue for
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Break-Even Units, Contribution Margin Ratio, Margin of
Safety
Khumbu Company's projected profit for the coming year is as
follows:
Total
Per Unit
Sales
$3,331,250
$41.00
Total variable cost
999,375
12.30
Contribution
margin
$ 2,331,875
$ 28.7
Total fixed cost
1,009,369
Operating income
$ 1,322,506
Required:
1. Compute the break-even point in units. If
required, round your answer to nearest whole value.
units
2. How many units must be sold to earn a profit
of $240,000? If required, round your answer...

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