Question

In: Accounting

1. The following information is for Nichols Company: Selling price $120 per unit Variable costs $50...

1. The following information is for Nichols Company: Selling price $120 per unit Variable costs $50 per unit Total fixed costs $300,000 What is the contribution margin per unit?

2. The following information is for Nichols Company: Selling price $110 per unit Variable costs $80 per unit Total fixed costs $310,000 What is the operating income if 10,000 units are sold?

3. The following information is for Nichols Company: Selling price $120 per unit Variable costs $90 per unit Total fixed costs $315,000 What is the break-even point?  

4. The following information is for Nichols Company: Selling price $130 per unit Variable costs $60 per unit Total fixed costs $315,000 How many units need to be sold to achieve an operating income of $157500?

Solutions

Expert Solution

Solution 1.

Selling prices $120 per unit

Variable cost $50 per unit

Total fixed cost $300000

Contributions margin per unit=+selling price per unit - variable cost per unit)

=( $120 -$50)

= $70

2.

Selling prices =$110 per unit

Variable cost= $80 per unit

Fixed cost =$310000

Unit sold =10000unit

Calculateion of operating profit /loss

Sales( 10000unit ×110 p.u) 1100000
Less variable cost(10000×80) 800000
Contributions 300000
Less Fixed cost 310000
Operating loss 10000

3.

Calculateion of break even point. ?

Selling prices= $120p.u

Variable cost=$90p.u

Total Fixed cost=$315000

Break even point= Fixed cost/ contributions per unit

= (315000/120-90)

= 10500 unit

In amount . =( 10500×120p.u)=$1260000

4.

Calculateion of number of unit sold

Selling price=$130 p.u

Variable cost=$ 60 p.u

Total fixed cost= $ 315000

Operating income = $157500

P.v ratio = contributions p.u/selling price per.u

= 70/130

= 53.84%

Number of unit sold=( fixed cost+ profit/p.v ratio)

=[ 315000+157500/53.84%]

= 742500

  


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