Gamma Pharmaceuticals

Scenario: Analyze Variable Costs

Data:

• Production Data:
  • Units Produced: 15,000 units
  • Variable Cost per Unit: $12

• Cost Information:
  • Total Variable Costs: $150,000

Requirements:

1. Calculate the variable cost per unit.
2. Determine the total fixed costs incurred by Gamma Pharmaceuticals.
3. Prepare a contribution margin income statement.
4. Calculate the breakeven point in units and dollars.
5. Discuss strategies to reduce variable costs without impacting product quality.