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3 years ago

Porter Corporation has fixed costs of $660,000, variable costs of $24 per unit, and a contribution

Business

1 answer:

Vitek1552 [10]3 years ago

5 0

Answer and Explanation:

The computation is shown below:

a. The unit sale price is

But before that the variable cost ratio is

= 100% - 40%

= 60%

Now the unit sale price i

= $24 × 100% ÷ 60%

= $40

Now the contribution margin per unit is

= $40 - $24

= $16

b. the sales volume in units is

= Fixed cost + operating income ÷ contribution margin per unit

= ($660,000 + $300,000) ÷ $16

= 60,000 units

c. Sales volume in dollars is

= Fixed cost + operating income ÷ contribution margin ratio

= ($660,000 + $300,000) ÷ 40%

= $2,400,000

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