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   390 Units   850 Units   1270 Units Total Costs           Variable costs   $124,800       Fixed costs           Total Costs           Cost per unit           Variable cost per unit           Fixed cost per unit           Total Cost per unit       $558  

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 $610. (Round your Margin Ratio percentage answers to 2 decimal places (i.e. .1234 should be entered as 12.34%.))

390 units       850 Units       1270 Units   Total Contribution Margin                       Contribution Margin Ratio       %       %       %

3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of $610. (Round your answers to the nearest whole dollar amount.)

390 Units   850 Units   1270 Units Net Operating Income (Loss)

Answer 1

1

Complete Presidio’s cost data table

Answer:

variable cost per unit as= 124800/390 = 270

using total cost per unit given for 850 units, Total cost for 850 = 850*558 =474300

Total Fixed cost = Total cost - total variable cost = 474300-272000 = 2023000

Bikes produced and sold	390	850	1270
	Units	Units	Units
Total Cost
Variable cost	124800	272000	406400
Fixed cost	202300	202300	202300
Total Cost	327100	474300	608700
Cost per unit
Variable Cost per unit	320	320	320
Fixed Cost per unit	518.72	238	159.29
Cost per unit	838.72	558	479.29

Working notes for the above answer is as under

__________________________________________________________________

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 $610

Answer:

	390	850	1270
	Units	Units	Units
Total Contribution margin	113100	246500	368300
Contribution margin Ratio	47.54%	47.54%	47.54%

Working notes for the above answer is as under

__________________________________________________________________

3

Calculate net operating income (loss) at each of the sales levels assuming a sales price of $610

Answer:

	390	850	1270
	Units	Units	Units
Sales Revenue (as calculated above)	237900	518500	774700
Less: variable cost (as calculated above)	124800	272000	406400
Total Contribution margin	113100	246500	368300
Less: Fixed cost (as calculated above)	202300	202300	202300
Net Operating Income (Loss)	-89200	44200	166000