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Michael's Machine Shop reports the following information for the quarter.
Sales price $70
Fixed costs (for the quarter)
Selling and administrative 47,620
Production 142,860
Variable cost (per unit)
Materials 18
Labor 15
Plant supervision 8
Selling and administrative 9
Number of units (for the quarter) 23,810 units
Required:
Select the answer for each of the following costs.
a) Variable cost per unit.
b) fixed cost amount
c) breakeven point
d) expected sales

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facundobuzzetti

Answer:

Results are below.

Explanation:

First, we need to calculate the variable cost per unit:

Variable cost per unit= Materials + Labor + Plant supervision + Selling and administrative

Variable cost per unit= 18 + 15 + 8 + 9

Variable cost per unit= $50

Now, the fixed cost:

Fixed costs= Selling and administrative + Production

Fixed costs= 47,620 + 142,860

Fixed costs= $190,480

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 190,480 / (70 -50)

Break-even point in units= 9,524

Finally, the expected sales:

expected sales= 23,810*70

expected sales= $1,666,700

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