Question

PA6-1 Calculating Contribution Margin, Contribution Margin Ratio, Break-Even Point [LO 6-1, 6-2]

Hermosa, Inc., produces one model of mountain bike. Partial information for the company follows:

Number of bikes produced and sold		520		820		1,000
Total costs
Variable costs	$	123,240	$	?	$	?
Fixed costs per year		?		?		?
Total costs		?		?		?
Cost per unit
Variable cost per unit		?		?		?
Fixed cost per unit		?		?		?
Total cost per unit		?	$	524.75		?

Required:
1. Complete the table. (Round your "Cost per Unit" answers to 2 decimal places.)

Number of bikes produced and sold	520 Units	820 units	1000 units
total costs
Variable Costs	$123,240	$194,496	$237,190
Fixed Costs per year
total costs	$400,039	$471,295	$513,989
Cost per unit
Variable cost per unit
Fixed cost per unit

total cost per unit

$796.50

$524.75

$513.99

  
2. Calculate Hermosa’s contribution margin ratio and its total contribution margin at each sales level indicated in the table assuming the company sells each bike for $800. (Round your percentage answers to 2 decimal places. (i.e. .1234 should be entered as 12.34%.))

	520 Units		820 Units		1000 units
Contribution margin ratio		%		%		%
total contribution margin

4. Calculate Hermosa’s break-even point in units and sales revenue. (Round your answers to the nearest whole number.)

Break-even units		Bokes
Break-even sales revenue

Answer 1

for formulas and calculations, refer to the image below -