I know the numbers in there are correct but I cannot figure out part C. Calculat
ID: 2695180 • Letter: I
Question
I know the numbers in there are correct but I cannot figure out part C.
Calculating Costs and Break-Even [LO3] Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $10.48 per unit, and the variable labor cost is $6.89 per unit. What is the variable cost per unit? (Round your answer to 2 decimal places. (e.g., 32.16)) Suppose NSI incurs fixed costs of $870,000 during a year in which total production is 280,000 units. What are the total costs for the year? If the selling price is $49.99 per unit, what is the cash break-even point? If depreciation is $490,000 per year, what is the accounting break-even point? (Round your answers to 2 decimal places. (e.g., 32.16))Explanation / Answer
a.The total variable cost per unit is the sum of the two variable costs, so:
Total variable costs per unit = $10.48 + 6.89
Total variable costs per unit = $17.37
b.The total costs include all variable costs and fixed costs. We need to make sure we are
including all variable costs for the number of units produced, so:
Total costs = Variable costs + Fixed costs
Total costs = $17.37(2,80,000) + $870,000
Total costs = $5,733,600
c.The cash breakeven, that is the point where cash flow is zero, is:
QC= $870,000 / ($49.99