Presidio, Inc. produces one model of mountain bike. Partial information for the
ID: 2341280 • Letter: P
Question
Presidio, Inc. produces one model of mountain bike. Partial information for the company follows Required 1. Complete Presidio's cost data table. (Round your Cost per Unit answers to 2 decimal places.) Bikes Produced and Sold 490 Units 910 Units 1040 Units Total costs Variable costs S 137,200 Fixed costs per year Total costs S 137,200 $ Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit 0.00 533.00 $ 0.00 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 $630. (Round your Margin Ratio percentage answers to 2 decimal places (i.e. .1234 should be entered as 12.34%.)) 490 Units 910 Units 1040 Units Total Contribution Margin Contribution Margin RatioExplanation / Answer
1 Bikes produced and sold 490 Units 910 Units 1040 Units Total cost Variable costs $ 1,37,200 $ 2,54,800 $ 2,91,200 Fixed cost per year $ 2,30,230 $ 2,30,230 $ 2,30,230 Total costs $ 3,67,430 $ 4,85,030 $ 5,21,430 Cost per unit Variable cost per unit $ 280.00 $ 280.00 $ 280.00 Fixed cost per unit $ 469.86 $ 253.00 $ 221.38 Total cost per unit $ 749.86 $ 533.00 $ 501.38 Workings Bikes produced and sold 490 units 910 units 1040 units Total cost Variable costs $13,72,00 (given) $280 X 910 units $280 X 1040 units Fixed cost per year $253 X 910 units = $2,30,230 Total costs Cost per unit Variable cost per unit $1,37,200 / 490 units = $280 Fixed cost per unit $2,30,230 / 490 units $253.00 (balancing figure) $2,30,230 / 1040 units Total cost per unit $533.00 (given) Note: Variable cost per unit will remain same for all production levels and Total Fixed cost will remain same for the periodand it will differ in per unit Fixed cost. 2 Bikes produced and sold 490 Units 910 Units 1040 Units Total contribution margin $ 1,71,500 $ 3,18,500 $ 3,64,000 Contribution margin ratio 55.56% 55.56% 55.56% Workings: Selling price = $ 630 Bikes produced and sold 490 Units 910 Units 1040 Units (i) Sales revenue (@630 X no. Of units) $ 3,08,700 $ 5,73,300 $ 6,55,200 Less: Variable cost $ 1,37,200 $ 2,54,800 $ 2,91,200 (ii) Total contribution margin $ 1,71,500 $ 3,18,500 $ 3,64,000 (ii) / (i) Contribution margin ratio 55.56% 55.56% 55.56% 3 Bikes produced and sold 490 Units 910 Units 1040 Units Net operating Income (loss) $ -58,730 $ 88,270 $ 1,33,770 Workings: Bikes produced and sold 490 Units 910 Units 1040 Units Total contribution margin $ 1,71,500 $ 3,18,500 $ 3,64,000 Less: Fixed cost per year $ 2,30,230 $ 2,30,230 $ 2,30,230 Net operating Income (loss) $ -58,730 $ 88,270 $ 1,33,770