Question

PA5-4 Predicting Cost Behavior, Calculating Contribution Margin and Contribution Margin Ratio, Calculating Profit [LO 5-1, 5-5]

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

Required:
1. Complete Presidio’s cost data table. (Round your Cost per Unit answers to 2 decimal places.)

	Bikes Produced and Sold 430 Units 870 Units 1606 Units Total costs Variable costs $137,600 Fixed costs per year Total costs $137,600 $0 $0 Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit $0.00 $530.00 $0.00

2. Calculate Presidio’s contribution margin ratio and its total contribution margin at each sales level indicated in the cost data table assuming the company sells each bike for $600. (Round your Margin Ratio percentage answers to 2 decimal places (i.e. .1234 should be entered as 12.34%.))

	430 Units 870 Units 1606 Units Total Contribution Margin Contribution Margin Ratio % % %

3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of $600. (Round your answers to the nearest whole dollar amount.)

	430 Units 870 Units 1606 Units Net Operating Income (Loss)

Answer 1

Bikes Produced and Sold 430 Units 870 Units 1606 Units Total costs Variable costs $137,600 278400 513920 Fixed costs per year 182700 182700 182700 Total costs $320300 $461100 $696620 Cost per unit Variable cost per unit 320 320.00 320 Fixed cost per unit 424.88 210.00 113.76 Total cost per unit $744.88 $530.00 $433.76

2. Calculate Presidio’s contribution margin ratio and its total contribution margin at each sales level indicated in the cost data table assuming the company sells each bike for $600.

	430 Units 870 Units 1606 Units Total Contribution Margin 120400 243600 449680 Contribution Margin Ratio 46.67 % 46.67 % 46. %

3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of $600.

	430 Units	870 Units	1606 Units
Net Operating Income (Loss)	(62300)	60900	266980