Answer and Explanation:
According to the scenario, computation of the given data are as follow:-
A) Total Variable Cost = Variable Cost Manufacturing + Variable Cost Selling Per Unit
= $14+ $6
= $20
Contribution Margin (CM)= Sales - Total Variable Cost
= $42 - $20
= $22
Contribution Margin Ratio (CMR) = Contribution Margin ÷ Sales × 100
= $22 ÷ $42 × 100
= 52.38%
Total Fixed Cost = Fixed Manufacturing Cost + Fixed Selling And Administrative Cost
= $162,000 + $132,800
= $294,800
Break Even in Units = Total Fixed Cost ÷ Contribution Margin
= $294,800 ÷ $22
= $13,400
Break Even in Dollars = Total Fixed Cost ÷ Contribution Margin Ratio
= $294,800 ÷ 52.38%
= $562,810.23
B).
Particular Amount ($)
Desired Profit 132,000
Add: Total Fixed Cost 294,800
Total Amount 426,800
Break Even in Units (Total Amount ÷ CM) = $426800 ÷ $22 = 19,400
Break Even in Dollars(Total Amount ÷ CMR)
= $426800 ÷ 52.38%
= $814,814.81
C). Sales = Sale Unit × Selling Price Per Unit
= 20,300 × $42
= $852,600
Variable Cost = Sale Units × Variable Manufacturing Cost Per Unit
= 20,300 × $14
= $284,200
Fixed Cost = Sales - Variable Cost - Profit
= $852,600 - $284,200 - $132,000
= $436,400
Salaries for Sales People = Total Fixed Cost-Fixed Cost Manufacturing -Selling And Administrative Fixed Cost
= $436,400 - $162,000 - $132,800
= $141,600
