. At the break-even point, Jefferson Company sells 115,000 units and has fixed cost of $349,600. The variable cost per unit is $

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. At the break-even point, Jefferson Company sells 115,000 units and has fixed cost of $349,600. The variable cost per unit is $

4.56. What price does Jefferson charge per unit? Note: Round your answer to the nearest cent. $ 2. Sooner Industries charges a price of $120 and has fixed cost of $458,000. Next year, Sooner expects to sell 15,600 units and make operating income of $166,000. What is the variable cost per unit? What is the contribution margin ratio? Note: Enter the contribution margin ratio as a percentage, rounded to two decimal places.

Business

1 answer:

Scilla [3.2K] · Answer 1 · 2026-03-06T18:06:22+03:00

Answer:

1. Selling price per unit = $7.60

2. Variable cost per unit = $80; Contribution margin ratio = 33.33%

Explanation:

Requirement 1

We use the formula,

Break-even point (in units) = Fixed cost ÷ (Price per unit - Variable cost)

Where,

Fixed cost = $349,600

Price per unit = Total sales ÷ Total units (to determine the sales price)

Variable cost per unit = $4.56

At the break-even point, selling 115,000 units results in neither profit nor loss.

This leads to the equation: 115,000 = $349,600 ÷ (Price per unit - $4.56)

or, 115,000 × (Price per unit - $4.56) = $349,600

thus, Price per unit - $4.56 = $349,600 ÷ 115,000

which gives us Price per unit = $3.04 + $4.56 = $7.60

Requirement 2

Sooner Industries

Income statement (contribution margin format)

For 15,600 units sold

Unit Total (%)

Sales revenue $120 $1,872,000 100

(-) Variable expense $(80) (3) $(1,248,000) (2) 66.67

Contribution Margin $40 $624,000 (1) 33.33 (4)

(-) Fixed expense $(458,000) 24.47

Net operating income $166,000 8.86

Note - 1:

Contribution Margin - Fixed expense = Net Income

or, Contribution Margin - $458,000 = $166,000

or, Contribution Margin = $166,000 + 458,000

or, Contribution Margin = $624,000

Note - 2:

Sales - Variable expense = Contribution margin

or, $1,872,000 - Variable expense = $624,000 (From Note - 1)

or, Variable expense = $1,248,000

Note - 3:

Variable cost per unit = Total Variable expense ÷ number of units sold

or, Variable cost per unit = $1,248,000 ÷ 15,600

or, Variable cost per unit = $80

Note - 4:

Contribution margin ratio = (Contribution Margin ÷ Total sales) × 100

or, Contribution margin ratio = ($624,000 ÷ $1,872,000) × 100

or, Contribution margin ratio = 33.33%

. At the break-even point, Jefferson Company sells 115,000 units and has fixed cost of $349,600. The variable cost per unit is $

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