Suppose that Patron Company sells a product for $24. Unit costs are as follows: Direct materials............................................... $4.98
Question:
Suppose that Patron Company sells a product for $24. Unit costs are as follows:
Direct materials............................................... $4.98
Direct labor ........................................................2.58
Variable factory overhead ...............................1.00
Variable selling and administrative expense 2.00
Total fixed factory overhead is $30,000 per year, and total fixed selling and administrative expense is $11,664.
Required:
1. Calculate the variable cost per unit and the contribution margin per unit.
2. Calculate the contribution margin ratio and the variable cost ratio.
3. Calculate the break-even units.
4. Prepare a contribution margin income statement at the break-even number of units.
Step by Step Answer:
Managerial Accounting The Cornerstone Of Business Decision Making
ISBN: 9780357715345
8th Edition
Authors: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger