Presidio, Inc. produces one model of mountain bike. Partial information for the
ID: 2581523 • Letter: P
Question
Presidio, Inc. produces one model of mountain bike. Partial information for the company follows:
Required:
1. Complete Presidio’s cost data table. (Round your Cost per Unit answers to 2 decimal places.)
2. Calculate Presidio’s contribution margin ratio and its total contribution margin at each sales level indicated in the cost data table assuming the company sells each bike for $630. (Round your Margin Ratio percentage answers to 2 decimal places (i.e. .1234 should be entered as 12.34%.))
3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of $630. (Round your answers to the nearest whole dollar amount.)
Explanation / Answer
1)
Bikes produced and sold
410 units
830 units
1308 units
Total costs
Variable costs
139400
139400/410 *830 = 282200
139400/410 *1308 = 444720
Fixed costs per year
166000
448200 – 282200 = 166000
166000
Total costs
139400+166000 = 305400
540*830 = 448200
444720+166000 = 610720
Cost per unit
Variable cost per unit
139400/410 = 340
282200/830 = 340
444720/1308 = 340
Fixed cost per unit
166000/410 = 404.88
540 – 340 = 200
166000/1308= 126.91
Total cost per unit
744.88
540
466.91
2)
410 units
830 units
1308 units
Total contribution margin
(630-340)*410 = 118900
(630-340)*830 = 240700
(630-340)*1308 = 379320
Contribution margin ratio
118900/(630*410) = 118900/258300 = 46.03%
240700/(630*830) = 240700/522900 = 46.03%
379320/(630*1308) = 379320/824040 = 46.03%
3)
410 units
830 units
1308 units
Net operating Income (Loss)
258300 – 305400 = (47100)
522900 – 448200 =74700
824040 – 610720 =213320
Bikes produced and sold
410 units
830 units
1308 units
Total costs
Variable costs
139400
139400/410 *830 = 282200
139400/410 *1308 = 444720
Fixed costs per year
166000
448200 – 282200 = 166000
166000
Total costs
139400+166000 = 305400
540*830 = 448200
444720+166000 = 610720
Cost per unit
Variable cost per unit
139400/410 = 340
282200/830 = 340
444720/1308 = 340
Fixed cost per unit
166000/410 = 404.88
540 – 340 = 200
166000/1308= 126.91
Total cost per unit
744.88
540
466.91
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