Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials

Question

Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $15.80 per unit, and the variable labor cost is $6.50 per unit.

a. What is the variable cost per unit? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

b. Suppose NSI incurs fixed costs of $700,000 during a year in which total production is 300,000 units. What are the total costs for the year? (Do not round intermediate calculations. Round your answer to the nearest whole number, e.g., 32.)

c. If the selling price is $45.50 per unit, what is the cash break-even point? If depreciation is $500,000 per year, what is the accounting break-even point? (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)

Explanation / Answer

Statement showing computations Particulars Amount a) Variable Costs: Variable Materials Cost                  15.80 Variable Labour Cost                     6.50 Total Variable Costs per unit                  22.30 b) Total Variable Costs per unit                  22.30 No of units        300,000.00 Total Variable Costs   (300,000*22.60)    6,690,000.00 Total Fixed Costs        700,000.00 Total Costs = VC + FC    7,390,000.00 c) Selling price per unit                  45.50 Total Variable Costs per unit                  22.30 Contribution per unit                  23.20 Cash BEP = Fc excl dep/Cont per unit Cash BEP = 700,000/23.20 = 30,167.21 Units Cash BEP in $ = 30167.21*45.50    1,372,728.84 Accounting BEP = (FC+ Dep)/Cont pu Accounting BEP = (700000+500000)/23.20 Accounting BEP = 51,724.14 Units Accounting BEP in $ = 51724.14 *45.50    2,353,655.17

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