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

Question

Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $1.65 per unit, Requirement 1: What is the variable cost per unit? (Do not round your intermediate calculations.) | (Click to select) Requirement 2: Suppose NSI incurs fixed costs of $450,000 during a year in which total production is 247,500 units. What are the total costs for the year? (Do not round your intermediate calculations.) | (Click to select) Requirement 3: (a) If the selling price is $11.8 per unit, what is the NSI break-even on a cash basis? (Do not round your intermediate calculations.) (Click to select) (b) depreciation is per year, what is the accounting breakeven point? (Do not round your r culations (Click to select

Explanation / Answer

Requirement 1

Total Variable cost per unit = Material Variable cost + Material Variable cost

= $1.65 + $2.31

= $3.96

Total Variable cost per unit is $3.96.

Requirement 2

Total Fixed cost = $450,000

Unit produced = 247,500

Total Cost = $450,000 + (247,500 × $3.96)

= $450,000 + $980,100

= $1,430,100.

Total Cost is $1,430,000.

Requirement 3

a.

Break Even point = $450,000 / ($11.80 - $3.96)

= $450,000 / $7.84

= 57,358

Break even point is 57,358 unit.

b.

Depreciation expenses = $123,750

Accounting break even = ($450,000 + $123,750) / ($11.80 - $3.96)

= $573,750 / $7.84

= 73,128 unit.

Accounting break even is 73,128.

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