Question

A firm manufactures a product that sells for $12 per unit. Variable cost per unit is...

A firm manufactures a product that sells for $12 per unit. Variable cost per unit is $8 and fixed cost per month is $1200. Capacity is 1000 units per month. a. How much is the contribution margin? __________ b. How much is the contribution rate? ___________ c. How many units must they sell per month in order to break even? _________ d. How many units must they sell in order to have a profit of $2,500 per month? ___________

Math   Statistics-And-Probability   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

a) Contribution Margin:

Following formula can be used to calculate the contribution margin:

Contribution Margin = Total Sales - Total Variable Cost

Contribution Margin = $ 12 * 1000 - $8*1000 = $ 4000

b) Contribution rate:

Following formula can be used to calculate the contribution rate:

Contribution rate:  (Total Sales - Total Variable Cost)/Total Sales

Contribution Rate = 4000/12000 = 0.333 or 33.3%

c) Break-Even:

The formula for break-even point is as follows:

Break-Even = Fixed Cost/Contribution margin per unit

Break-Even = 1200/(12-8) = 1200/3 = 400 units

Thus break-even will be at 400 units

d) to calculate the number of units at a particular profit, the following formula should be used:

Number of units = (Fixed Cost + Target Profit)/Contribution margin per unit

Number of units = (1200+2500)/4 = 925 units

925 units should be made to get the profit of $ 2500

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Wang Co. manufactures and sells a single product that sells for $540 per unit; variable...
1. Wang Co. manufactures and sells a single product that sells for $540 per unit; variable costs are $324 per unit. Annual fixed costs are $836,000. Current sales volume is $4,290,000. Compute the contribution margin per unit. 2. A firm expects to sell 24,800 units of its product at $10.80 per unit and to incur variable costs per unit of $5.80. Total fixed costs are $68,000. The total contribution margin is: 3. McCoy Brothers manufactures and sells two products, A...
A company sells Product X for $30 per unit. The Direct Material Cost, Direct labor cost,...
A company sells Product X for $30 per unit. The Direct Material Cost, Direct labor cost, and Variable MFO costs total $21 per unit. Fixed costs to product the product are $135,000. How many units of Product X must the company sell in order to break even? What is the contribution margin ratio for product X? How many units of Product X must be sold in order for the company to earn a $50,000 profit? If the company was selling...
Blanchard Company manufactures a single product that sells for $100 per unit and whose total variable...
Blanchard Company manufactures a single product that sells for $100 per unit and whose total variable costs are $76 per unit. The company’s annual fixed costs are $338,400. (1) Prepare a contribution margin income statement for Blanchard Company at the break-even point. BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Amount Percentage of sales % Sales Variable costs Contribution margin Fixed costs $ (2) Assume the company’s fixed costs increase by $126,000. What amount of sales (in dollars) is needed...
A manufacturing process has a fixed cost of $250,000 per month. Each unit of product being...
A manufacturing process has a fixed cost of $250,000 per month. Each unit of product being produced contains $17 worth of material and $42 in labor. Each finished product will sell for $100. How many units must be sold each month to break even? What level of monthly revenue is necessary to break even? What is the expected profit for sales levels of 2,500, 7,500, and 10,000 units respectively?
1) Bears Company sells a product for $15 per unit. The variable cost is $10 per...
1) Bears Company sells a product for $15 per unit. The variable cost is $10 per unit and fixed costs are $1,750,000. Determine: The Break-Even point in sales units The Break-Even point if selling price were increased to $655 per unit 2) Bear Company sells a product for $15 per unit. The Variable cost is $10 per unit and fixed costs are $1,750,000. Determine: The Break-Even Point in sales units The Sales units required for the company to achieve a...
Brummel Corporation manufactures a single product. The selling price is $120 per unit, and variable costs...
Brummel Corporation manufactures a single product. The selling price is $120 per unit, and variable costs amount to $84 per unit. The fixed costs are $42,000 per month (round any units to the next highest full unit). Calculate: (show your calculations and round to 2 decimal places) What is the contribution margin per unit? What is the contribution margin ratio per unit? What is the monthly sales volume (in dollars) at the break-even point? How many units must be sold...
Blanchard Company manufactures a single product that sells for $110 per unit and whose total variable...
Blanchard Company manufactures a single product that sells for $110 per unit and whose total variable costs are $88 per unit. The company’s annual fixed costs are $308,000. (1) Prepare a contribution margin income statement for Blanchard Company at the break-even point. BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Amount Percentage of sales Sales Variable costs Contribution margin Fixed costs Net income Sales Variable costs Contribution margin Fixed costs Net income % Sales Variable costs Contribution margin Fixed costs...
Scrushy Company sells a product for $150 per unit. The variable cost is $110 per unit,...
Scrushy Company sells a product for $150 per unit. The variable cost is $110 per unit, and fixed costs are $200,000. Determine (a) the break-even point in sales units and (b) the break-even point in sales units if the company desires a target profit of $50,000. a. Break-even point in sales units b. Break-even point in sales units if the company desires a target profit of $50,000
Blanchard Company manufactures a single product that sells for $240 per unit and whose total variable...
Blanchard Company manufactures a single product that sells for $240 per unit and whose total variable costs are $192 per unit. The company’s annual fixed costs are $734,400. (1) Prepare a contribution margin income statement for Blanchard Company showing sales, variable costs, and fixed costs at the break-even point. (2) Assume the company’s fixed costs increase by $138,000. What amount of sales (in dollars) is needed to break even? BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Amount Percentage of...
1. A company's product sells for $150 and has variable costs of $60 associated with the...
1. A company's product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin per unit? a. $150 b. $90 c. $60 d. $40 2. A company's contribution margin per unit is $25. If the company increases its activity level from 200 units to 350 units, how much will its total contribution margin increase? a. $1,250 b. $8,750 c. $3,750 d. $5,000 3. If a company has fixed costs of $6,000 per...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT