PA54 Predicting Cost Behavior Calculating Contribution Margi

PA5-4 Predicting Cost Behavior, Calculating Contribution Margin and Contribution Margin Ratio, Calculating Profit [LO 5-1, 5-5 581.25

Solution

Bikes Produced and Sold 625 800 1050 Variable Cost   @ $200 per unit 125000 160000 210000 Fixed Cost per Year 305000 305000 305000 Total Cost 430000 465000 515000 Cost per Unit Variable cost per unit 200 200 200 Fixed cost per unit 488 381.25 290.48 Total Cost per Unit 688 581.25 490.48 Variable cost per Unit =125000/625=$200 per unit Fixed Cost per unit=581.25-200 =381.25 Total Fixed Cost=381.25*800=305000 Bikes Produced and Sold 625 800 1050 Sales @650 406250 520000 682500 Less Variable cost 125000 160000 210000 Contrbution 281250 360000 472500 Contrbution Margin Ratio = Contrbution/Sales 69.23% 69.23% 69.23% Net Operating income = Contrbution less fixed cost -23750 55000 167500