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

Question

Night Shades, Inc. ( NSI), manufactures biotech sunglasses. The variable materials cost is $ 10.48 per unit, and the variable labor cost is $ 6.89 per unit. a. What is the variable cost per unit? b. Suppose NSI incurs fixed costs of $ 870,000 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 $ 49.99 per unit, does NSI break even on a cash basis? If depreciation is $ 490,000 per year, what is the accounting break- even point?

Explanation / Answer

Night Shades Inc. Details Amt $ Variable Materials cost per unit                          10.48 Variable Labor cost per unit                            6.89 a Total variable cost per unit                          17.37 b Fixed costs incurred per year                     870,000 Units Produced                     280,000 Total Variable cost @ 6.89 per unit=                 1,929,200 Total Costs incurred for the year =Fixed +Variable costs=                 2,799,200 c Selling Price per unit                            49.99 Total variable cost per unit                          17.37 Unit Contribution Margin $                     32.62 Break even units cash basis =Fixed costs incurred /Unit contribution margin=                       26,671 units As the sale is 280,000 units , NSI crossed the Break Even point d Depreciation expense per year                     490,000 Total Fixed cost as per Accounting                   1,360,000 Unit Contribution Margin                          32.62 Accounting Break Even=1360000/32.62=                       41,692 units

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.