Question
In: Accounting
Selling price per unit (package of 2 CDs)...................................... $20.00 Variable costs per unit: Direct material............................................................................................................... $4.00...
| Selling price per unit (package of 2 CDs)...................................... | $20.00 |
|---|---|
| Variable costs per unit: | |
| Direct material............................................................................................................... | $4.00 |
| Direct labor...................................................................................................................... | $5.00 |
| Artist's royalties.............................................................................................................. | $3.50 |
| Manufacturing overhead.......................................................................................... | $3.00 |
| Selling expenses............................................................................................................ | $1.00 |
| Total variable costs per unit............................................................ | $16.50 |
| Annual fixed costs: | |
| Manufacturing overhead.......................................................................................... | $180,000 |
| Selling and administrative....................................................................................... | $220,000 |
| Total fixed costs................................................................................ | $400,000 |
| Forecasted annual sales volume (120,000 units)......................... | $2,400,000 |
If the company's direct-labor costs do increase by 8%, what selling price per unit of product must it charge to maintain the same contribution margin ratio
Solutions
Expert Solution
Present situation
Selling price per unit = $20
Variable cost per unit = $16.50
Contribution margin per unit = Selling price per unit - Variable cost per unit
= 20 - 16.50
= $3.50
Contribution margin ratio = Contribution margin per unit/Selling price per unit
= 3.50/20
= 17.5%
Future position
Increase in direct labor cost = 8%
= 5 x 8%
= $0.4
Due to increase in direct labor cost by $0.4 per unit, variable cost per unit will also increase by $0.40
Variable cost per unit = 16.50 + 0.4
= $16.90
Selling price per unit = ?
Contribution margin ratio = 17.5%
Contribution margin ratio = (Selling price per unit - variable cost per unit)/Selling price per unit
0.175 = (Selling price per unit - 16.90)/Selling price per unit
0.175 selling price per unit = Selling price per unit - 16.90
0.175 selling price per unit - Selling price per unit = -16.90
-0.825 selling price per unit = -16.90
Selling price per unit = 16.90/0.825
= $20.48
selling price per unit of product must it charge to maintain the same contribution margin ratio = $20.48
ekkarill92 answered 2 years agoRelated Solutions
Selling price per unit $20.00 Variable costs per unit: Direct materials $4.00 Direct manufacturing labor $1.60...
Selling price per unit $20.00
Variable costs per unit:
Direct materials $4.00
Direct manufacturing labor $1.60
Manufacturing overhead $0.40
Selling costs $2.00
Fixed costs $96,000
A. Calculate the number of units the company must sell to break
even.
B. Calculate net profit/net lose if the company sold 9,500
units.
C. Calculate the number of units the company must sell to make a
net profit of $144,000.
Data Selling price per unit $50 Manufacturing costs: Variable per unit produced: Direct materials $11 Direct...
Data
Selling price per unit
$50
Manufacturing costs:
Variable per unit produced:
Direct materials
$11
Direct labor
$6
Variable manufacturing overhead
$3
Fixed manufacturing overhead per year
$120,000
Selling and administrative expenses:
Variable per unit sold
$4
Fixed per year
$70,000
Year 1
Year 2
Units in beginning inventory
0
Units produced during the year
10,000
6,000
Units sold during the year
8,000
8,000
Enter a formula into each of the cells marked with a ?
below
Review Problem 1:...
"La Yuca" company produces raw material for the alcapurrias industry. It has fixed weekly costs of $ 4,000.00 plus variable costs per unit of $ 3.00. The raw material is sold in the market for $ 20.00 per package.
"La Yuca" company produces raw material for the alcapurrias industry.
It has fixed weekly costs of $ 4,000.00 plus variable costs per unit of $ 3.00. The raw material is sold in the market for $ 20.00 per package.
a) determine the total cost to produce # 2,000 packages
b) determine the cost per unit, average cost, for the # 2,000 packages
c) How much can the fixed cost go down if you want to make a profit of $ 3,000.00 per week?
Xion Co. budgets a selling price of $91 per unit, variable costs of $32 per unit,...
Xion Co. budgets a selling price of $91 per unit, variable costs
of $32 per unit, and total fixed costs of $290,000. During June,
the company produced and sold 12,800 units and incurred actual
variable costs of $371,000 and actual fixed costs of $305,000.
Actual sales for June were $1,190,000. Prepare a flexible budget
report showing variances between budgeted and actual results. List
variable and fixed expenses separately.
(Indicate the effect of each variance by selecting for
favorable, unfavorable, and...
Given the following information: Selling Price (per unit): $10,000 Variable Costs (per unit): $7,000 Fixed Costs:...
Given the following information:
Selling Price (per unit): $10,000
Variable Costs (per unit): $7,000
Fixed Costs: $200,000
Required
Each of these are separate situations:
What is the break-even point in total sales in
dollars?
How many units need to be sold to make a profit of
$20,000?
How many units need to be sold to make a profit of
$20,000 if fixed costs increase from $200,000 to
$250,000?
How many units would they need to sell if they wanted
to...
Given the following information: Selling Price (per unit): $10,000 Variable Costs (per unit): $7,000 Fixed Costs:...
Given the following information:
Selling Price (per unit): $10,000
Variable Costs (per unit): $7,000
Fixed Costs: $200,000
Required
Each of these are separate situations:
What is the break-even point in total sales in
dollars?
How many units need to be sold to make a profit of
$20,000?
How many units need to be sold to make a profit of
$20,000 if fixed costs increase from $200,000 to
$250,000?
How many units would they need to sell if they wanted
to...
if fixed costs are $728,400, the unit selling price is $42, and the unit variable costs...
if fixed costs are $728,400, the unit selling price is $42, and
the unit variable costs are $27, what is the break-even sales
(units) if target profits are increased by $330,930?
A) 26,498
B) 22,062
C) 48,560
D) 70,622
if the contribution margin ratio for 4 Zsons Company is 30%,
sales were $843,000 and fixed costs were $113,295, what was the
income from operations?
A) 252,900
B) 139,605
C) 158,200
D) 377,650
Period Costs:
A) are expensed as costs are...
If fixed costs are $247,000, the unit selling price is $116, and the unit variable costs...
If fixed costs are $247,000, the unit selling price is $116, and
the unit variable costs are $73, what are the break-even sales in
units (rounded to a whole number)?
Sales (in units) 60,000 Selling price per unit $25 Manufacturing costs per unit: Materials 5 Direct...
Sales (in units)
60,000
Selling price per unit
$25
Manufacturing costs per unit:
Materials
5
Direct labor
4
Overhead
Variable
4
Fixed
6
Total
$19
Gross margin
6
Selling and admin. Expenses per unit
2
Operating income
$4
A company in a foreign market offer to buy and the
offer specifies the following data
units to be sold
10,000
price per unit
$12
The incremental profit should be
Steven Company has fixed costs of $239,080. The unit selling price, variable cost per unit, and...
Steven Company has fixed costs of $239,080. The unit selling
price, variable cost per unit, and contribution margin per unit for
the company's two products are provided below.
Product
Selling Price
per unit
Variable Cost
per unit
Contribution Margin
per unit
X
$1,248
$468
$780
Y
473
253
220
The sales mix for products X and Y is 60% and 40% respectively.
Determine the break-even point in units of X and Y combined. Round
answer to nearest whole number.
units...
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