Answer:
Zachary Company
a. Selling price per unit = $70
b. Contribution Margin Income Statement, assuming that Zachary invests in the new production equipment:
Sales Revenue $476,000
Variable cost ($16 * 6,800) 108,800
Contribution $367,200
Fixed costs ($276,600 + 9,700) 286,300
Net income $80,900
Explanation:
a) Data and Calculations:
Annual production and sales = 6,800 units
Variable cost per unit = $18
Total variable cost = $122,400 ($18 * 6,800)
Fixed costs = $276,600
Total cost = $399,000 ($122,400 + $276,600)
Annual profit earned = $77,000
Therefore, sales revenue = $476,000 ($399,000 + $77,000)
Selling price per unit = $70 ($476,000/6,800)
