In 2012, Paterno Company had a break-even point of $348,500based on a selling pr

Question

In 2012, Paterno Company had a break-even point of $348,500based on a selling price of $7per unit and fixed costs of $106,000. In 2013, the selling price and the variable cost per unit did not change, but the break-even point increased to $411,000.
Compute the variable cost per unit and the contribution margin ratio for 2012. (Round variable cost per unit to 2 decimal places, e.g. $2.75 and contribution margin ratio to 0 decimal places, e.g. 28%)

Variable cost per unit
$
Contribution margin ratio
% $ In 2012, Paterno Company had a break-even point of $348,500based on a selling price of $7per unit and fixed costs of $106,000. In 2013, the selling price and the variable cost per unit did not change, but the break-even point increased to $411,000.

Explanation / Answer

348500 = 106000/CM so CM in 2012 = 0.30416 CM = (selling price - variable cost price)/selling price = (7-V)/7 = 0.30416 which gives Variable cost per unit = $2.13 Part b since selling price and variable cost price does not change so CM will be same as before = 30%

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.