Question: Answer the following questions under required.
Exercise 1: Fixed versus variable cost behavior
Nasenko Company's cost and production data for two recent months included the following:
|
|
March
|
April
|
|
Production (units)
|
200
|
400
|
|
Rent
|
$1,800
|
$1,800
|
|
Utilities
|
$600
|
$1,200
|
Required: A. Separately calculate the rental cost per unit and the utilities cost per unit for both March and April.
B. Identify which cost is variable and which is fixed. Explain your answer.
Exercise 2: Break-even point
Agassi Corporation sells products for $90 each that have variable costs of $60 per unit. Agassi's annual fixed cost is $450,000.
Required: Determine the break-even point in units and dollars.
Exercise 3: Desired profit
Lindo Company incurs annual fixed costs of $80,000. Variable costs for Lindo's product are $40 per unit, and the sales price is $64 per unit. Lindo desires to earn an annual profit of $40,000.
Required: Determine the sales volume in dollars and units required to earn the desired profit.