1000 potrts Night Shades Inc. (NSID manufactures biotech sunglasses. The variabl
ID: 1175913 • Letter: 1
Question
1000 potrts Night Shades Inc. (NSID manufactures biotech sunglasses. The variable materials cost is $1240 per unit and the variable labor cost is 36.30 per unit a. What is the variable cost per unit? (Do not round intermediate calculations. Round your answer to 2 decimal places, eg. 32.16 b. Suppose NSil inours fxed costs of $700,000 during a year in which total production is 330,000 units What are the total costs for the year? (Do not round intermediate calculations. Round your answer to the nearest whole number, eg, 32) ?.lfthne seing price is $4700 per unit, what is te cash breakeven port? if depreaation is S500.000 per year what is the aocounting break-even point? (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g. 32.16) units
Explanation / Answer
Answer of Part a:
Variable cost = Variable material cost +Variable labor cost
Variable cost = $12.40 + $6.80
Variable Cost = $19.2
Answer of Part b:
Total Variable cost = variable cost per unit * total production
Total Variable cost = $19.2 * 330,000
Total Variable cost = $6,336,000
Total Cost = Fixed cost + Variable cost
Total Cost = $700,000 + $6,336,000
Total Cost [= $7,036,000
Answer of Part c:
Contribution margin per unit = Selling price – variable cost
Contribution margin per unit = $47 - $19.2
Contribution margin per unit = $27.8
Cash Break Even Point = Fixed costs / contribution margin per unit
Cash Break Even Point= $700,000 / 27.8
Cash Break Even Point [= 25,179.86 unit
Accounting Break Even Point = (Fixed cost + Depreciation) / contribution margin per unit
Accounting Break Even Point = ($700,000 + $560,000) / 27.8
Accounting Break Even Point = $1,260,000 / 27.8
Accounting Break Even Point = 45,323.74 unit
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