Schylar Pharmaceuticals, Inc., plans to sell 115,000 units of antibiotic at an average price of $23 each
Question:
Schylar Pharmaceuticals, Inc., plans to sell 115,000 units of antibiotic at an average price of $23 each in the coming year. Total variable costs equal $846,400. Total fixed costs equal $7,400,000.
Required:
1. What is the contribution margin per unit? Round your answer to the nearest cent. $
What is the contribution margin ratio? Round your answer to two decimal places. (Express as a decimal-based answer rather than a whole percent amount.)
2. Calculate the sales revenue needed to break even. Round your answer to the nearest dollar. $
3. Calculate the sales revenue needed to achieve a target profit of $295,000. Round your answer to the nearest dollar. $
4. What if the average price per unit increased to $24.50? Recalculate the following:
a. Contribution margin per unit. Round your answer to the nearest cent. $
b. Contribution margin ratio. Enter your answer as a decimal value (not a percentage), rounded to four decimal places.
c. Sales revenue needed to break even. In your computations, use your rounded answer from part (4-b) above for the contribution margin ratio, and round your final answer to the nearest dollar. $
d. Sales revenue needed to achieve a target profit of $295,000. In your computations, use your rounded answer from part (4-b) above for the contribution margin ratio, and round your final answer to the nearest dollar. $
Cornerstones of Cost Management
ISBN: 978-1285751788
3rd edition
Authors: Don R. Hansen, Maryanne M. Mowen