Question

Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $10.48 per unit, and the variable labor cost is $6.89 per unit.

  

a.	What is the variable cost per unit? (Round your answer to 2 decimal places. (e.g., 32.16))

  

Variable cost

$

  

b.	Suppose NSI incurs fixed costs of $870,000 during a year in which total production is 280,000 units. What are the total costs for the year?

  

Total cost

$

  

c.	If the selling price is $49.99 per unit, what is the cash break-even point? If depreciation is $490,000 per year, what is the accounting break-even point? (Round your answers to 2 decimal places. (e.g., 32.16))

Cash break-even point	units
Accounting break-even point	units

Answer 1

Requirement a
	$
Varaiable materials cost per unit	10.48
Varaiable Lobor cost per unit	6.89
Total Variable cost per unit	17.37
Requirement b
Variable cost (280000 units *$17.37)	4863600
Fixed cost	870000
Total Cost	5733600
Requirement c.
Sellin price per unit	49.99
Variable cost per unit	17.37
Contribution per unit	32.62
Cash break even point
=(Fixed cost -Depreciation)/ Contribution per unit
= (870000-490000)/32.62
= 11,649.29 units
Accounting break even point
=Fixed cost/ Contribution per unit
= 870000/32.62
= 26,670.75 units