Hermosa, Inc., produces one model of mountain bike. Partial information for the

Question

Hermosa, Inc., produces one model of mountain bike. Partial information for the company follows:

     
Required:
1. Complete the table. (Round your "Cost per Unit" answers to 2 decimal places.)


  
2. Calculate Hermosa’s contribution margin ratio and its total contribution margin at each sales level indicated in the table assuming the company sells each bike for $780. (Round your percentage answers to 2 decimal places. (i.e. .1234 should be entered as 12.34%.))



4. Calculate Hermosa’s break-even point in units and sales revenue. (Round your answers to the nearest whole number.)

     Number of bikes produced and sold 530 840 900 Total costs Variable costs $ 126,140 $ ? $ ? Fixed costs per year ? ? ? Total costs ? ? ? Cost per unit Variable cost per unit ? ? ? Fixed cost per unit ? ? ? Total cost per unit ? $ 530.75 ?

Explanation / Answer

1. Complete the table. (Round your "Cost per Unit" answers to 2 decimal places.)

Calculate Hermosa’s contribution margin ratio and its total contribution margin at each sales level indicated in the table assuming the company sells each bike for $780.

Answer is 69.49%

Calculate Hermosa’s break-even point in units and sales revenue.

Number of bikes produced and sold 530 840 900 Total costs Variable costs 126,140 199920 214200 Fixed costs per year 245910 245910 245910 Total costs 372,050 445,830 460,110 Cost per unit Variable cost per unit 238 238 238 Fixed cost per unit 463.98 292.75 273.23 Total cost per unit 701.98 530.75 511.23

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