Chapter 18: Q8DQ (page 832)
Define and describe contribution margin per unit.
Particular | Amount $ |
Sales price per unit | $ |
Less: Variable cost per unit | () |
Contribution margin per unit | $ |
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Refer to Vijay Company’s data in QS 18-17. Compute its product cost per unit under variable costing.
Zhao Co. has fixed costs of \(354,000. Its single product sells for \)175 per unit, and variable costs are $116 per unit. Determine the break-even point in units.
Felix & Co. reports the following information about its unit sales and cost of sales. Draw an estimated line of cost behavior using a scatter diagram, and compute fixed costs and variable costs per unit sold. Then use the high-low method to estimate the fixed and variable components of the cost of sales.
Period | Unit | Cost of sales | Period | Unit | Cost of sales |
1 | 0 | \(2,500 | 6 | 2,000 | \)5,500 |
2 | 400 | 3,100 | 7 | 2,400 | 6,100 |
3 | 800 | 3,700 | 8 | 2,800 | 6,700 |
4 | 1,200 | 4,300 | 9 | 3,200 | 7,300 |
5 | 1,600 | 4,900 | 10 | 3,600 | 7,900 |
SBD Phone Company sells its waterproof phone case for \(90 per unit. Fixed costs total \)162,000, and variable costs are $36 per unit. Determine the (1) contribution margin per unit and (2) break-even point in units.
How is cost-volume-profit analysis useful?
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