Question

Compute the missing amounts. ​(Enter the contribution margin ratio to nearest​ percent, X%.)

A B C
Sales price per unit $200 $4,000 $5,220
Variable costs per unit 80 1,000 2,088
Total fixed costs 73,200 660,000 3,758,400
Target profit 266,760 3,000,000 3,132,000
Calculate:
Contribution margin per unit
Contribution margin ratio
Required units to break even
Required sales dollars to break even
Required units to achieve target profit

Answer 1

Contribution margin per unit

A = $120

B = $3,000

C = $3,132

Contribution margin ratio

A = 60%

B = 75%

C = 60%

Units to break even

A = 610 units

B = 220 units

C = 1,200 units

Sales dollars to break even

A = $122,000

B = $880,000

C = $6,264,000

Units to achieve target profit

A = 2,833 units

B = 1220 units

C = 2,200 units

Step-by-step explanation:

Contribution margin per unit

Contribution margin = Sales - Variable Costs

A B C

Sales price per unit $200 $4,000 $5,220

Variable costs per unit ($80) ($1,000) ($2,088)

Contribution Margin $120 $3,000 $3,132

Contribution margin ratio

Contribution margin ratio = Contribution / Sales × 100

A = $120 / $200 × 100

= 60%

B = $3,000 / $4,000 × 100

= 75%

C = $3,132 / $5,220 × 100

= 60%

Units to break even

Units to break even = Fixed Cost ÷ Contribution margin per unit

A = $73,200 ÷ $120

= 610 units

B = $660,000 ÷ $3,000

= 220 units

C = $3,758,400 ÷ $3,132

= 1,200 units

Sales dollars to break even

Units to break even = Fixed Cost ÷ Contribution margin ratio

A = $73,200 ÷ 60%

= $122,000

B = $660,000 ÷ 75%

= $880,000

C = $3,758,400 ÷ 60%

= $6,264,000

Units to achieve target profit

Units to achieve target profit = Fixed Cost + Target Profit ÷ Contribution margin per unit

A = $73,200 + 266,760 ÷ $120

= 2,833 units

B = $660,000 + 3,000,000 ÷ $3,000

= 1220 units

C = $3,758,400 + 3,132,000 ÷ $3,132

= 2,200 units