1) Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materia
ID: 2752323 • Letter: 1
Question
1) Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $12.50 per unit, and the variable labor cost is $7.20 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 $840,000 during a year in which total production is 370,000 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 $49.00 per unit, what is the cash break-even point? If depreciation is $640,000 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
2) Sloan Transmissions, Inc., has the following estimates for its new gear assembly project: price = $1,300 per unit; variable costs = $260 per unit; fixed costs = $4.8 million; quantity = 72,000 units. Suppose the company believes all of its estimates are accurate only to within ±15 percent. What values should the company use for the four variables given here when it performs its best-case scenario analysis? What about the worst-case scenario?
Scenario
Units Sales
Unit Price
Unit
Variable cost
Fixed Costs
Base
$
$
$
Best
Worst
1) Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $12.50 per unit, and the variable labor cost is $7.20 per unit.
Explanation / Answer
2)
Variable material cost 12.5 per unit variable labor cost 7.2 per unit Varaible cost per unit 19.7 per unit Variable cost 7,289,000 (370,000*19.7) Fixed Cost 840,000 Total cost 8,129,000 Selling price 49 Less: variable cost 19.7 contribution per unit 29.3 Fixed cost 840,000 cash break even point-units 28,669 units (840000/29.3) Fixed cost 840,000 Depreciation 640,000 Total 1,480,000 accounting break-even point 50,512 units (1480000/29.3)Related Questions
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