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	770 Units	1924 Units
Total Costs
Variable costs	$106,600
Fixed costs
Total Costs
Cost per unit
Variable cost per unit
Fixed cost per unit
Total Cost per unit		$532

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%.))

	410 units		770 Units		1924 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.)

	410 Units	770 Units	1924 Units
Net Operating Income (Loss)

Answer 1

1

Complete Presidio’s cost data table

Bikes produced and sold	Units	Units	Units
	410	770	1924
Total Costs
Variable costs	106600	200200	500240
Fixed costs	209440	209440	209440
Total Costs	316040	409640	709680
Cost per unit
Variable cost per unit	260	260	260
Fixed cost per unit	510.8	272	108.9
Total Cost per unit	770.8	532	368.9

Working notes for the above answer is as udner.

1

variable cost per unit =106600/410=260

2

Fixed cost per unit at 770 units level

=532-260

=272

3

Total variable cost at 770 units level =770*260=200200

Total cost at 770 units level =770*532=409640

Total fixed costt at 770 units level =409640-200200=209440

4

Total cost at 410 units level =106600+209440=316040

5

Total cost at 1924 units level =500240+209440=709680

____________________________________________________________

2

	Units	Units	Units
	410	770	1924
Contribution margin	143500	269500	673400
Contribution margin ratio	57.38%	57.38%	57.38%

Working for the above answer is as under

.

	Units	Units	Units
	410	770	1924
Sales (a)	610	610	610
less: variable cost per unit (b)	260	260	260
Contribution margin C=A-B	350	350	350
Contribution margin C*units	143500	269500	673400
Contribution margin ratio =C/A	57.38%	57.38%	57.38%

_____________________________________________________________________

3

	Units	Units	Units
	410	770	1924
Sales (a)	610	610	610
less: variable cost per unit (b)	260	260	260
Contribution margin C=A-B	350	350	350
Contribution margin C*units	143500	269500	673400
Less: Fixed cost	209440	209440	209440
Net Operating Income (Loss)	(65940)	60060	463960