Presidio, Inc. produces one model of mountain bike. Partial information for the
ID: 2437927 • 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.)
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 $640. (Round your Margin Ratio percentage answers to 2 decimal places (i.e. .1234 should be entered as 12.34%.))
3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of $640. (Round your answers to the nearest whole dollar amount.
Presidio, Inc. produces one model of mountain bike. Partial information for the company ollows Required: 1. Complete Presidio's cost data table. (Round your Cost per Unit answers to 2 decim places.) Bikes Produced and Sold 450 Units 910 Units Total costs 16a Units Variable costs S 144,000 Fixed costs per year Total costs 144.000 Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit 0.00 S 53800 S 0.00 2. sales level indicated in the cost data table assuming the company sells each bike for (Round your Margin Ratio percentage answers to 2 decimal places (le. .1234 should be entered as 12.34%.)) Calculate Presidio's contribution margin ratio and its total contribution margin at each $640 450 Units 910 Units 1628 Units Total Contribution Margin Contribution Margin Ratio 3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of Shan (Round vour answers to the nearest whole dollaramount.)
Explanation / Answer
(1) Cost Data Table :-
450 Units
910 Units
1628 Unts
Total Costs
Variable cost
144000
(910 * 320) = 291200
(1628 * 320) = 520960
Fixed cost per year
198380**
198380**
198380**
Total Costs
342380
489580
719340
Cost per unit
Variable cost pu
320*
320*
320*
Fixed cost pu
440.84
218
121.86
Total cost pu
760.84
538
441.86
*Variable cost per unit = $144000/450 units = $320
VC per unit will remain same
**Fixed Cost :-
In 910 Units:-
Cost pu = $538
Total Cost = $538 * 910 units = $489580
Variable cost for 910 units = 910 units * $320 = $291200
Fixed Cost = Total cost – Variable cost
= 489580 – 291200 = 198380
Fixed cost will remain same in all the above cases irrespective of the no of units produced & sell
(2) Contribution Margin Ratio & its Total contribution Margin :-
450 Units
910 Units
1628 Units
Total contribution Margin
144000
291200
520960
Contribution Margin Ratio
50%
50%
50%
SP pu = $640
Contribution Margin = Sale Value – Variable cost
Contribution Margin Ratio = (Contribution Margin / Sale Value) * 100
450 Units
910 Units
1628 Units
Sale value (A)
(450 * $640)
=288000
(910 * $640)
=582400
(1628 * $640)
=1041920
(-) Variable Cost
144000
291200
520960
Contribution Margin (B)
144000
291200
520960
Contribution Margin Ratio (B/A)
(144000/288000) * 100
=50%
(291200/582400) * 100
=50%
(520960/1041920)*100
=50%
(3) Net Operating Income (Loss) :-
Net Operating Income (Loss) = Sals value – VC – Fixed cost
450 Units
910 Units
1628 Units
Sale value
(450 * $640)
=288000
(910 * $640)
=582400
(1628 * $640)
=1041920
(-) Variable Cost
144000
291200
520960
Contribution Margin
144000
291200
520960
(-) Fixed Cost
198380
198380
198380
Net Operating Income (Loss)
(54380)
92820
322580
450 Units
910 Units
1628 Unts
Total Costs
Variable cost
144000
(910 * 320) = 291200
(1628 * 320) = 520960
Fixed cost per year
198380**
198380**
198380**
Total Costs
342380
489580
719340
Cost per unit
Variable cost pu
320*
320*
320*
Fixed cost pu
440.84
218
121.86
Total cost pu
760.84
538
441.86