Presidio, Inc. produces one model of mountain bike. Partial information for the

Question

Presidio, Inc. produces one model of mountain bike. Partial information for the company follows Required: 1. Complete Presidio's cost data table. (Round your Cost per Unit answers to 2 decimal places.) Bikes Produced and Sold 625 Units 800 Units 1,050 Units Total costs 125,000 $ 275,000 400,000 160,000$ 275,000 435,000 210,000 275,000 485,000 Variable costs Fixed costs per year Total costs Cost per unit 200.00 $ 440.00 640.00 $ 200.00 $ 343.75 543.75 $ 200.00 261.90 461.90 S Variable cost per unit Fixed cost per unit Total cost per unit 2. Calculate Presidio's contribution margin ratio and its total contribution margin at each sales level indicated in the cost data table assuming the company sells each bike for $650. (Round your Margin Ratio answers to 2 decimal places.) 625 Units 800 Units 1,050 Units Total Contribution Margin $ Contribution Margin Ratio 450 450 450 69.23 % 69.23 % 69.23 %

Explanation / Answer

Total Contribution Margin:

a) Level of sales: 625 units

Total Contribution Margin = Revenue - Variable expenses = 406250 - 125000 = 281250

Contribution Margin Ratio = 281250 / 406250 = 69.23%

b) Level of sales: 800 units

Total Contribution Margin = Revenue - Variable expenses = 520000 - 160000 = 360000

Contribution Margin Ratio = 360000 / 520000 = 69.23%

c) Level of sales: 1050 units

Total Contribution Margin = Revenue - Variable expenses = 682500 - 210000 = 472500

Contribution Margin Ratio = 472500 / 682500 = 69.23%

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