FIND: Total variable cost per batch sales price per batch using \"markup on vari
ID: 2443912 • Letter: F
Question
FIND:Total variable cost per batch
sales price per batch using "markup on variable costs"
contribution margin per batch and contribution margin ratio
breakeven point in dollars and in units
the sales level in units to earn a target operating income of $60,000
GIVEN INFO:
sales price:
mark-up on toal variable costs per batch 150%
cost:
direct materials per batch $2
direct labor per batch $5
variable overhead costs per batch $0.40
variable selling and administrative costs per batch $0.60
fixed manufacturing cost $50,000
fixed administrative cost $30,000
Explanation / Answer
Total variable cost per batch
Direct Materials $2.00
Direct labor $5.00
Variable overhead $0.40
Variable Selling &
Administration overhead $0.60
Total Variable costs $8.00
sales price per batch using "markup on variable costs"
$8.00 x 150% = $12.00 per batch
contribution margin per batch and contribution margin ratio
$12.00 - $8.00 = $4.00
S4.00 / $12.00 = 33-1/3 % (or 33.33%)
breakeven point in dollars and in units
Total Fixed costs = $50,000 + $30,000 = $80,000
BEP(Units ) = $80,000 / $4 = 20,000 batches
BEP(dollar) = $80,000 x 12 / $4 = $240,000
the sales level in units to earn a target operating income of $60,000
Fixed costs + Target operating income
= $80,000 + $60,000 = $140,000
Required sales(Units ) = $140,000 / $4 = 35,000 batches
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