PA5 4 Predicting Cost Behavior Calculating Contribution Margin and Contribution Margin Ratio

Question: #942

PA5-4 Predicting Cost Behavior, Calculating Contribution Margin and Contribution Margin Ratio, Calculating Profit [LO 5-1, 5-5]

Presidio, Inc. produces one model of mountain bike. Partial information for the company follows:
Bikes Cost per Unit: 625 800 1050

Bikes Produced and Sold 625 Units 800 Units 1,050 Units
Total costs
Variable costs $125,000
Fixed costs per year
Total costs
Cost per unit
Variable cost per unit
Fixed cost per unit
Total cost per unit $543.75

Required :
1. Complete Presidio’s cost data table. (Round your Cost per Unit answers to 2 decimal places.)

2. Calculate Presidio’s contribution margin ratio and its total contribution margin at each sales level indicated in the cost data table assuming the company sells each bike for $650. (Round your Margin Ratio answers to 2 decimal places.)

3. Calculate net operating income at each of the sales levels assuming a sales price of $650.

Solution: #948

PA5-4 Predicting Cost Behavior Calculating Contribution Margin and Contribution Margin Ratio

1    Bikes Produced and Sold (units)    625    800    1050
    Total costs
    Variable costs    $125,000.00    $160,000.00    $210,000.00
    Fixed costs per year    $275,000.00    $275,000.00    $275,000.00
    Total costs     $400,000.00    $435,000.00  &nbs...