Question

Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 20,000 units at a price of $340 each. Product costs include: Direct materials $71.00 Direct labor $41.00 Variable overhead $10.00 Total fixed factory overhead $619,950 Variable selling expense is a commission of 5 percent of price; fixed selling and administrative expenses total $93,600.

Answer 1

1.Calculation of contribution margin per unit:

Margin per unit= Selling price per unit - Variable cost

= (340)- ( 71+41+10+17)

= 340-139

=$201

2. Calculation of break even units

Break even = fixed cost/ Contribution by margin

= ( 619950+93600)/ 201

=3550 units