Can anyone help me with this one? Not sure how to start off. Thank you :) In 201

Question

Can anyone help me with this one? Not sure how to start off. Thank you :)

In 2012, Grissom Company had a break-even point of $366,400 based on a selling price of $8 per unit and fixed costs of $98,928. In 2013, the selling price and the variable cost per unit did not change, but the break-even point increased to $454,178. Compute the variable cost per unit and the contribution margin ratio for 2012. (Round Variable cost per unit to 2 decimal places, e.g. $2.25 and Contribution margin ratio to 0 decimal places, e.g. 20%.) Variable cost per unit $ Contribution margin ratio %

Explanation / Answer

Break even point = 366,400 366,400/8 = 45,800 units Fixed costs = 98,928 Variable costs = 366,400 – 98,928 = $267,472 Variable cost per unit = $267,472/45,800 = $5.84 Answer: variable cost per unit = $5.84 per unit Contribution margin ratio = (sales – variable costs)/sales = (366,400 – 267,472)/366,400 = 0.27 Answer: contribution margin ratio = 0.27

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