Question

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

Required:
1. Complete Presidio’s cost data table.
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 $620.
3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of $620.

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

	Bikes Produced and Sold 740 Units 890 Units 1,348 Units Total costs Variable costs $192,400 $231,400 $350,480 Fixed costs per year Total costs $192,400 $231,400 $350,480 Cost per unit Variable cost per unit $260.00 $260.00 $260.00 Fixed cost per unit 284.00 Total cost per unit $260.00 $544.00 $260.00

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 $620. (Round your Contribution Margin Ratio percentage answers to 2 decimal places (i.e. .1234 should be entered as 12.34%.))

	740 Units 890 Units 1,348 Units Total Contribution Margin Contribution Margin Ratio % % %

Calculate net operating income (loss) at each of the sales levels assuming a sales price of $620. (Round your answers to the nearest whole dollar amount.)

	740 Units 890 Units 1,348 Units Net Operating Income

Answer 1

1
Bikes Produced and Sold	740 Units	890 Units	1,348 Units
Total costs
Variable costs	192400	231400	350480
Fixed costs per year	252760	252760	252760
Total costs	445160	484160	603240
Cost per unit
Variable cost per unit	260.00	260.00	260.00
Fixed cost per unit	341.57	284.00	187.51
Total cost per unit	601.57	544.00	447.51
2
	740 Units	890 Units	1,348 Units
Total Contribution Margin	266400	320400	485280
Contribution Margin Ratio	58.06%	58.06%	58.06%
3
	740 Units	890 Units	1,348 Units
Total Contribution Margin	266400	320400	485280
Less: Fixed costs	252760	252760	252760
Net Operating Income	13640	67640	232520
Workings:
Fixed costs per year	252760	=284*890
	740 Units	890 Units	1,348 Units
Total Contribution Margin	=740*(620-260)	=890*(620-260)	=1348*(620-260)
Contribution Margin Ratio	58.06%	=(620-260)/620