Question

Given the following data, answer the questions below: Soccer ball sale price $10 Soccer ball direct...

Given the following data, answer the questions below:

Soccer ball sale price $10

Soccer ball direct materials cost per ball $4

Soccer ball direct labor cost per ball $1

Commission for each soccer ball sold $1

Fixed factory overhead per period $100,000

Administrative costs per period $50,000

Advertising costs per period $50,000

Questions

What is the contribution margin per ball?

What are the dollars of fixed costs for the period?

How many soccer balls must be sold to break even for the period?

How many soccer balls must be sold to attain $40,000 operating profit?

How may soccer balls must be sold to break even for the period if you drop your price to $8?

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Homework Answers

Answer #1

1) Contribution per ball = Selling price per ball less variable cost per ball

=10-(4+1)

=10-5

=5$

2)Fixed cost per period = Fixed factory overhead+Administrative costs+Advertising costs

=100000+50000+50000

=200000$

3) Break even in units = Fixed cost/CPU

=200000/5

=40,000 units

4) Units to be sold = Fixed cost+ desired profit/ CPU

=200000+40000/5

=240000/5

=48000 units

5) if price is droped to 8, new contribution = 8-5 = 3$

Break even point = fixed cost/CPU

=200000/3

=66,666.67 units

ie 66,667 units

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