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3 years ago

Suppose that Larimer Company sells a product for $24. Unit costs are as follows:

Business

1 answer:

yanalaym [24]3 years ago

3 0

Answer:

Variable cost per unit=$10.08

Contribution per unit=$13.92

Contribution margin ratio=58%

Variable cost ratio= 42%

c) Break-even units=3,000 units

Explanation:

Variable cost per unit

= 4.98 + 2.10 + 1.00 + 2.00 = $10.08

Variable cost per unit=$10.08

Contribution per unit = Selling price per unit - Variable cost per unit

= 24 - 10.08 =13.92

Contribution per unit=$13.92

Contribution margin ratio= contribution/selling price= 13.92/24 × 100=58%

Contribution margin ratio=58%

Variable cost ratio = variable cost/selling price= 10.08 /24× 100 = 42%

Variable cost ratio=42%

Break-even units = Total general fixed cost/contribution per unit

= (26,500 + 15,260)/ 13.92 = 3000 units

Break-even units=3,000 units

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