a b c dSolutionBeach company c Selling price per unit 1615

a, b , c &d..

Solution

Beach company

(c)

Selling price per unit = 1,615,000/170,000

= $ 9.5

Contribution margin ratio = Contribution per unit x 100

Selling price per unit

= 3.8 x 100

9.5

= 40%

(a)

Since contribution margin is 40%, hence variable cost must be 60% of sales.

Hence, variable cost = 60 % of sales

= 1,615,000 x 60%

= $ 969,000

(b)

Sales - variable cost - fixed cost = Operating income

1,615,000 - 969,000 - Fixed cost = 285,600

Fixed cost = $ 360,400

Lake company

(d)

Since contribution margin is 80%, hence variable cost must be 20% of sales.

Hence, variable cost = 20 % of sales

60,000 = Sales x 20%

Sales = 60,000 x 100/20

= $ 300,000