Question
In: Accounting
Rigby Inc. produces surveillance equipment. Selected data is provided below. Problem 2 Selling price 129.00 $/unit...
Rigby Inc. produces surveillance equipment. Selected data is provided below.
Problem 2
Selling price 129.00 $/unit
Variable costs 73.40$/unit
Fixed costs 32.10 $unit
Units produced and sold 3,850
REQUIRED:
Calculate the following:
-
Contribution margin per unit
-
Contribution margin ratio
-
Breakeven point in units
-
Breakeven point in sales
-
Sales ($) to reach target profit of $55,000
Solutions
Expert Solution
| Calculation of Contribution per unit | ||
| A | Sales | $ 129.00 |
| B | Variable cost | $ 73.40 |
| C=A-B | Contribution margin Per unit | $ 55.60 |
| Calculation of Contribution Margin ratio | ||
| A | Sales | $ 129.00 |
| B | Variable cost | $ 73.40 |
| C=A-B | Contribution margin | $ 55.60 |
| D= C/A | CM Ratio | 43.10% |
| Calculation of Breakeven point in units | ||
| A | Fixed cost (32.10 x 3850) | $ 1,23,585.00 |
| B | Contribution margin per unit | $ 55.60 |
| C=A/B | Break Even in Volume (units) | 2,223 |
| Calculation of Breakeven point in sales | ||
| A | Fixed cost (32.10 x 3850) | $ 1,23,585.00 |
| B | Contribution margin per unit | $ 55.60 |
| C=A/B | Break Even in Volume (units) | 2,223 |
| D= C x 129 | Breakeven sales in dollars | $ 286,735 |
| Sales ($) to reach target profit of $55,000 | ||
| A | Required profit | $ 55,000.00 |
| B | Fixed Cost | $ 1,23,585.00 |
| C=A+B | Contribution margin required | $ 1,78,585.00 |
| D | Contribution margin per unit | $ 55.60 |
| E=C/D | Volume (units) required to earn $55000 profit | 3212 |
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