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

Question

Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $12.30 per unit, and the variable labor cost is $6.40 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.) Variable cost $ b. Suppose NSI incurs fixed costs of $680,000 during a year in which total production is 290,000 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.) Total cost $ c. If the selling price is $45.00 per unit, what is the cash break-even point? If depreciation is $480,000 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.) Cash break-even point units Accounting break-even point units

Explanation / Answer

Variable material costs = 12.30/unit

Variable labour cots = 6.40/unit.

Total variable costs = 12.30 +6.40 = 18.70/Unit

Total Fixed Costs = 680,000

Total variable costs = 290,000*18.70 = 5,423,000

So total costs = 680,000 + 5,423,000 = 6,103,000

Now selling price is $45/unit. Thefore for cash breakeven

45*No. of Units = 6,103,000

Hence No of Units for cash break even = 135,623 Units ( 135,622.22)

Accounting break even point.

Depriciation = 480,000 per year. Hence total costs = 6,103,000 + 480,000 =6,583,000

Hence No. of units for accounting break even = 6583000/45 = 146,289 Units (146,288.88)

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