Question

Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the following independent situations, calculate the amount(s) required. Required: 1. At the break-even point, Jefferson Company sells 135,000 units and has foed cost of $350,600. The variable cost per unit is $0.40. What price does Jefferson charge per unit? Note: Round to the nearest cent. 2. Sooner Industries charges a price of $115 and has fixed cost of $459,500. Next year, Sooner expects to sell 13,500 units and make operating income of $162,000. What is the variable cost per unit? What is the contribution margin ratio? Note: Round your variable cost per unit answer to the nearest cent. Enter the contribution margin ratio as a percentage, rounded to two decimal places. Variable cost per unit Contribution margin ratio 3. Last year, Jasper Company carned operating income of $24,200 with a contribution margin ratio of 0.25. Actual revenue was $242,000. Calculate the total fed cost. Note: Round your answer to the nearest dollar, if required. 4. Laramie Company has variable cost ratio of 0.40. The fixed cost is $180,000 and 30,000 units are sold at break-even. What is the price? What is the variable cost per unit? The contribution margin per unit? Note: Do NOT round interim computations. Round answers to the nearest cent. Price Variable cost per unit

Answer 1

1.
Break even point = Fixed costs / Contribution margin per unit
135000 = 350600 / Contribution margin per unit
Contribution margin per unit = 350600 / 135000	2.60
Price per unit = Variable cost per unit + Contribution margin per unit = 0.40 + 2.60	3.00

2.
Expected sales units = ( Fixed costs + Operating income ) / Contribution margin per unit
13500 = ( 459500 + 162000 ) / Contribution margin per unit	621500
13500 = 621500 / Contribution margin per unit
Contribution margin per unit = 621500 / 13500	46.04
Variable cost per unit = Selling price per unit - Contribution margin per unit = 115 - 46.04	68.96
Contribution margin ratio = Contribution margin per unit / Selling price per unit = 46.04 / 115	40.03%

3.
Operating income = ( Actual revenue * Contribution margin ratio ) - Total fixed costs
24200 = ( 242000 * 0.25 ) - Total fixed costs
24200 = 60500 - Total fixed costs
Total fixed costs = 60500 - 24200	36300

4.
Break even point = Fixed costs / Contribution margin per unit
30000 = 180000 / Contribution margin per unit
Contribution margin per unit = 180000 / 30000	6.00
Contribution margin ratio = 1 - Variable cost ratio = 1 - 0.40	0.60
Price = Contribution margin per unit / Contribution margin ratio = 6.00 / 0.60	10.00
Variable cost per unit = Price - Contribution margin per unit = 10.00 - 6.00	4.00