Answer:
a. 6.4$
b. 1 600 000$
c. 6 400 000$
Explanation:
First, let's determine <em>net sales</em>. The total sales volume should be multiplied with product price.
Net sales = 250 000*32$ = 8 000 000$
Since we have the gross margin and net sales, we can determine the cost of goods sold (COGS).
COGS = Net Sales - Gross margin
COGS = 8 000 000 - 2 400 000 = 5 600 000$
Now that we have COGS, we can determine the total variable cost:
Total variable cost = COGS - Total fixed cost
Total variable cost = 5 600 000 - 250 000 * 16 = 1 600 000$
So, the variable cost per unit is:
Total variable cost/Number of units = 1 600 000 / 250 000 = 6.4$
Lastly, the total contribution margin is:
Total contribution margin = Sales Revenue - Total variable costs
Total contribution margin = 8 000 000 - 1 600 000 = 6 400 000$
This margin is useful when conducting a break-even analysis and determining the price of the product to be sold.
