Question

Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense

For each of the following independent situations, calculate the amount(s) required.

Required:

1. At the break-even point, Jefferson Company sells 85,000 units and has fixed cost of $346,500. The variable cost per unit is $0.10. What price does Jefferson charge per unit? Note: Round to the nearest cent.

$

2. Sooner Industries charges a price of $98 and has fixed cost of $476,500. Next year, Sooner expects to sell 16,300 units and make operating income of $174,000. What is the variable cost per unit? What is the contribution margin ratio? Note: Round your variable cost per unit answer to the nearest cent. Enter the contribution margin ratio as a percentage, rounded to two decimal places.

Variable cost per unit
Contribution margin ratio		%

3. Last year, Jasper Company earned operating income of $18,400 with a contribution margin ratio of 0.2. Actual revenue was $230,000. Calculate the total fixed cost. Note: Round your answer to the nearest dollar, if required.

$

4. Laramie Company has variable cost ratio of 0.45. The fixed cost is $82,500 and 25,000 units are sold at break-even. What is the price? What is the variable cost per unit? The contribution margin per unit? Note : Do NOT round interim computations. Round answers to the nearest cent.

Price	$
Variable cost per unit	$
Contribution margin per unit	$

Answer 1

1.)	Total Variable Costs	8,500	=85000*0.1
	Total Costs	355,000	=8500+346500
	Jefferson charge price per unit	$ 4.18	=355000/85000
2.)	Sales revenue	1,597,400
	Less: Fixed Costs	-476,500
	Less: Operating Income	-174,000
	Total Variable Costs	946,900
	Variable Cost per unit	$ 58.09	=946900/16300
	Contribution margin ratio	$ 40.72%	=(98-58.09)/98
3.)	Contribution margin	46,000	=230000*0.2
	Less: Operating Income	-18,400
	Total Fixed Costs	$ 27,600
4.)	Contribution Margin ratio	55%	=1-0.45
	Breakeven sales in Dollar	150,000	=82500/55%
	Units sold at Breakeven	25,000
	Price per unit	$ 6.00	=150000/25000
	Variable Cost per unit	$ 2.70	=6*0.45
	Contribution margin per unit	$ 3.30	=6-2.7