Calculating Costs and Break-Even: Night Shades Inc. (NSI) manufactures biotech s

Question

Calculating Costs and Break-Even: Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $5.43 per unit, and the variable labor cost is $3.13 per unit.
a. What is the variable cost per unit?
b. Suppose NSI incurs fixed costs of $720,000 during a year in which total production is 280,000 units. What are the total costs for the year?
c.If the selling price is $19.99 per unit, does NSI break even on a cash basis? If depreciation is $220,000 per year, what is the accounting break-event point?

Explanation / Answer

a. 5.43+3.13=8.56 b. 270,000 (fixed)+280,000*CPI (answer to a) 720,000+280,000*8.56=3 116 800 c. 19.99*280,000-answer to b. yes, well above enough. d. answer to c-220,000. So 2 896 800

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