Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, F

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. At the break-even point, Jefferson Company sells 85,000 units and has fixed cost of $350,200. The variable cost per unit is $0.15. What price does Jefferson charge per unit? Round to the nearest cent. Sooner Industries charges a price of $117 and has fixed cost of $466,000. Next year, Sooner expects to sell 19,200 units and make operating income of $156,000. What is the variable cost per unit? What is the contribution margin ratio? Round your answer to the nearest cent. Enter the contribution margin ratio as a percentage, rounded to two decimal places. Last year, Jasper Company earned operating income of $27,500 with a contribution margin ratio of 0.30. Actual revenue was $229,000. Calculate the total fixed cost. Round your answer to the nearest dollar. Laramie Company has variable cost ratio of 0.55. The fixed cost is $107,980 and 24,400 units are sold at breakeven. What is the price? What is the variable cost per unit? The contribution margin per unit?

Explanation / Answer

1) Compute the price per unit.

Sales in dollars = Fixed cost + variable cost per unit * units = $350,200+0.15*85,000 = $350,200+12,750 = $362,950

Sale price per unit = Sales in dollar / Number of units = $362,950 / 85000 = $4.27.

Therefore, the selling price per unit is $4.27.

2) Compute the contribution per unit.

Contribution per unit = (Operating profit + Fixed cost) / NUmber of units = (156000+466000)/19200

= 32.395.

Variable cost per unit = Selling price per unit - Contribution per unit = $117-$32.395 = $84.604.

Contribution margin ratio = Contribution per unit / selling price per unit = 27.68%.

3)

Contribution = revenue * contribution ratio = 229000*0.30 = $68,700

Fixed cost = Contribution - OPerating income = $68,700-27,500 = $41,200.

4)

Contribution ratio = 1-0.5 = 0.45

Contribution = Fixed cost = 107980.

Contribution per unit = 107980/24400 = $4.42

Sale price = $4.42/0.45 = $9.83

Variable cost per unit = $9.83-$4.42 = $5.40

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