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	$123,340
Fixed Costs per year
Total Cost	$123,240	$0	$0
Cost per unit
Variable cost per unit
Fixed cost per unit

Total cost per unit

$0.00

$574.75

$0.0

  
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 Unit		%		%		%
Total Contribution margin ratio

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

Break-even units		Bikes
Break-Even Sales Revenue

Answer 1