Question
A- NourCorporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product which
A-NourCorporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product which it sells at $86.35 per unit
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Production volume |
| 12,500 | units |
| 14,000 | units |
Direct materials | $ | 356,875 |
| $ | 399,700 |
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Direct labor | $ | 128,125 |
| $ | 143,500 |
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Manufacturing overhead (Mixed) | $ | 502,350 |
| $ | 513,675 | |
Fixed selling and administrative expenses | $ | 192,025 |
| $ | 192,025 |
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Required:Using high-low method and CVP analysis
1. Compute Nours breakeven point in units and dollars. Prove your answer
2. Compute how many units the company needs to sell to earn a profit of $ 600,000.
3.Compute the selling price per unit of the company if BEP (units) is 40,000 units and the variable cost per unit and total fixed cost does not change.
4.Explain the various methods used to estimate the variable component and the fixed component of the mixed cost (Excluding Scattergraph method) and state which method is the most accurate? Why?
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