Part A - Break-Even Analysis Instructions: 1. Determine the fixed and variable p
ID: 2371493 • Letter: P
Question
Part A - Break-Even Analysis
Instructions:
1. Determine the fixed and variable portion of the utility cost using the high-low method. Round the per unit cost to the nearest cent.
2. Determine the contribution margin per case. Enter your answer to the nearest cent. For example, 89.458 would be entered as 89.46
Contribution margin per case: $
3. Determine the fixed costs per month, including the utility fixed cost from part (1). Enter your answers to the nearest whole number. For example, 89.45 would be entered as 89 and 89.56 would be entered as 90.
4. Determine the break-even number of cases per month. Round your answer to the nearest whole number.
cases
Explanation / Answer
You need to minues 16.00 (commission) per sales caes.
You have 62.8 but -16 = 46.98 (per teacher)
1.correct
2.Don't know where you got the $5.04, but I'm going to presume that's direct labor since you didn't give that information, but it seems logical. And you left off the $16 commission. Commission isn't factory overhead. It's a selling cost. However, contribution margin is sales minus allvariable costs, regardless of whether they are product or period costs. So the $16 has to come out. (i.e. What moromba said, except this is the reason, not cause "per teacher.")
3. don't know because you never gave any overhead information. Except for the $200 of course. But let's pretend for the moment this is all correct. (They are all fixed expenses, but whether you've included everything or not I don't know.)
4.Where did you get 96? Break-even is fixed costs divided by contribution margin. Each unit made will cost the variable costs. The leftovers are the contribution margin for each unit made. That contributes towards covering the fixed costs. If you take fixed costs and divide by contribution margin, it's telling you how many you need to make in order to cover the fixed costs. You should be using the number figured in step (2) (once it's corrected for the $16).