Question

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	410 Units	850 Units	1766 Units
Total Costs
Variable Costs	$ 118900
Fixed Costs per year
Total Costs	$118900	$0	$0
Cost per unit
Variable Cost per unit
Fixed costs per unit
Total Costs per unit		$544.00

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 $640. (Round your Margin Ratio percentage answers to 2 decimal places (i.e. .1234 should be entered as 12.34%.))



3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of $640. (Round your answers to the nearest whole dollar amount.)

Answer 1

Answer is as per table and notes below :

Bikes produced and sold	410 units	850 units	1766 units
Total Costs
Variable Costs	118,900	246,500	512,140
Fixed Costs per year	215,900	215,900	215,900
Total Costs (Variable Cost + Fixed Cost)	334,800	462,400	728,040
Cost per unit
Variable Cost per unit	290	290	290
Fixed costs per unit	527	254	122
Total Costs per unit (Variable cost per unit + Fixed Cost per unit)	817	544	412
Sale Price per unit	640	640	640
Total Sales Revenue (Sale Price Per Unit x Bikes Sold)	262,400	544,000	1,130,240
Variable Costs	118,900	246,500	512,140
Total Contribution Margin (Sales - Variable Cost)	143,500	297,500	618,100
Contribution Margin Ratio (Contribution/Sales)	54.69%	54.69%	54.69%
Net Operating Income (Total Contribution - Fixed Costs)	(72,400)	81,600	402,200

Notes :

1. Variable Cost if divided by Units produced gives Variable Cost per unit, which remains constant at all levels of production. Hence Variable Cost per unit is filled for all rows. Accordingly Total Variable Cost is filled by multiplying Variable Cost per unit with each levels of production.

2. Total Cost per unit - Variable Cost per unit = Fixed Cost per unit

Fixed Cost per unit x Level of Production = Total Fixed Cost

This total fixed cost is fixed for levels of production. Accordingly Total fixed cost is filled for all levels of production. Further, dividing total fixed cost by level of activity gives the fixed cost per unit, which is filled for all levels of production