19 The Talent Company has a contribution margin CM per unit

19). The Talent Company has a contribution margin (CM) per unit of $30 and a contribution-margin-(CM) ratio-of 60%. How much-is-the selling or sales price each unit?

A) $50

B) $75

C) $18

D) Cannot be determined without more information.

20). At the break-even point (BEP) of 2,000 units, variable costs (V/C) are $55,000, and fixed costs (F/C) are $34,000. How much is the selling price (SP) per unit?

A) $44.50

B) $10.50

C) $17.00

D) Not enough information

21). A company has total fixed costs (F/C) of $160,000 and a contribution margin (CM) ratio of 20%. The total sales necessary to break even (BEP $$) are how much?

A) $640,000.

B) $800,000.

C) $200,000.

D) $192,000.

22). A company sells a product which has a unit sales price (SP) of $5, unit variable cost (V/C) of $3 and total fixed costs (F/C) of $150,000. The number of units the company must sell to break even is (BEP units)

A) 75,000 units.

B) 30,000 units.

C) 300,000 units.

Solution

1. CONTRIBUTION PER UNIT = $30

SELLING PRICE *60% = $30

SELLING PRICE = $30/60% = $50(OPTION A)

2. BREAK EVEN POINT($) = FIXED COST +VARIABLE COST

LET SELLING PRICE BE X

2000*X = $34,000+$55,000

X = 44.5(OPTION A )

3.BREAK EVEN SALES($)= FIXED COSTS/CONTIBUTION MARGIN

= $160,000/20%

= $800,000 (OPTION B)

4.BREAK EVEN SALES (UNITS) = FIXED COST/CONTRIBUTION PER UNIT

= $150,000/$5-$3 = 75000 UNITS (OPTION A)