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Night Shades, Inc. (NSI), manufactures biotech sunglasses. The variable materials cost is $11.13 per unit, and the variable labor cost is $7.29 per unit.Required:a. What is the variable cost per unit?b. Suppose the company incurs fixed costs of $875,000 during a year in which total your answer to 2 decimal places, e.g., 32.16.) production is 190,000 units. What are the total costs for the year?c. If the selling price is $44.99 per unit, does the company break even on a cash basis? I depreciation is $435,000 per year, what is the accounting break-even point?

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facundobuzzetti

Answer:

Explanation:

Giving the following information:

Unitary direct material cost= $11.13

Unitary direct labor cost= $7.29

A.

Total variable cost per unit= 11.13 + 7.29= $18.42

B. Fixed costs= $875,000

Production= 190,000

Total costs= 875,000 + 18.42*190,000= $4,374,800

C.

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 875,000 / (44.99 - 18.42)

Break-even point in units= 32,932 units

D. Depreciation= $435,000

Accounting break-even point= (875,000 - 435,000) / 26.75

Accounting break-even point= 16,449 units

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