476 0

# Presidio, Inc. produces one model of mountain bike. Partial information for the company follows:

Presidio, Inc. produces one model of mountain bike. Partial information for the company follows:

Required:
1. Complete Presidio’s cost data table. (Round your Cost per Unit answers to 2 decimal places.)

2. Calculate Presidio’s contribution margin ratio and its total contribution margin at each sales level indicated in the cost data table assuming the company sells each bike for \$640. (Round your Margin Ratio percentage answers to 2 decimal places (i.e. .1234 should be entered as 12.34%.))

3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of \$640. (Round your answers to the nearest whole dollar amount.

1) Cost Data Table:

 450 Units 910 Units 1628 Units Total Costs Variable cost 144000 (910 * 320) = 291200 (1628 * 320) = 520960 Fixed cost per year 198380** 198380** 198380** Total Costs 342380 489580 719340 Cost per unit Variable cost pu 320* 320* 320* Fixed cost pu 440.84 218 121.86 Total cost pu 760.84 538 441.86

*Variable cost per unit = \$144000/450 units = \$320

VC per unit will remain same

**Fixed Cost:-

In 910 Units:-

Cost pu = \$538

Total Cost = \$538 * 910 units = \$489580

Variable cost for 910 units = 910 units * \$320 = \$291200

Fixed Cost = Total cost – Variable cost

= 489580 – 291200 = 198380

Fixed cost will remain same in all the above cases irrespective of the no of units produced & sell.

2) Contribution Margin Ratio & its Total contribution Margin:

 450 Units 910 Units 1628 Units Total contribution Margin 144000 291200 520960 Contribution Margin Ratio 50% 50% 50%

SP pu = \$640

Contribution Margin = Sale Value – Variable cost

Contribution Margin Ratio = (Contribution Margin / Sale Value) * 100

 450 Units 910 Units 1628 Units Sale value                                 (A) (450 * \$640) =288000 (910 * \$640) =582400 (1628 * \$640) =1041920 (-) Variable Cost 144000 291200 520960 Contribution Margin              (B) 144000 291200 520960 Contribution Margin Ratio (B/A) (144000/288000) * 100 =50% (291200/582400) * 100 =50% (520960/1041920)*100 =50%

3) Net Operating Income (Loss):

Net Operating Income (Loss) = Sales value – VC – Fixed cost

 450 Units 910 Units 1628 Units Sale value (450 * \$640) =288000 (910 * \$640) =582400 (1628 * \$640) =1041920 (-) Variable Cost 144000 291200 520960 Contribution Margin 144000 291200 520960 (-) Fixed Cost 198380 198380 198380 Net Operating Income (Loss) (54380) 92820 322580      