question archive A company sells one of its products for $10
A company sells one of its products for $10
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A company sells one of its products for $10.40 per unit. Its fixed costs are $845.00 per month, and the variable cost per unit is $3.90.
(a) The contribution margin per unit is $____________ (rounded to the nearest cent).
(b) The break-even volume, i.e., the level of output at break-even, is____________ units per month. (If necessary, round up to the next whole number of units.)
(c) The profit at a monthly output level of 276 units is $_______________(rounded to the nearest cent).
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(a) Contribution Margin per unit = Selling price per unit - Variable cost per unit
= $10.4 - $3.9
= $6.5
(b) Break even point in units = Fixed Cost/Contribution margin per unit
= 845/6.5
= 130 units per month
(c) Profit at 276 units
Sales value (276 x $10.4). 2870.4
Variable cost (276 x $3.9). (1076.4)
Contribution Margin. 1794
Fixed cost. (845).
Profit. $949.
Hence, Profit at 276 units is $949.
