Question
Speedy Bikes, Inc. manufactures bicycles. Because it implemented lean production methods, it holds zero inventory at the end of each month. it is curently operating
Speedy Bikes, Inc. manufactures bicycles. Because it implemented lean production methods, it holds zero inventory at the end of each month. it is curently operating at 75% of capacity, producing and seling 10,000 bicycles per year. Financial data for its most recent fiscal year folows. Revenue= $3,500,000 Less: Costs (alphabetical order) CEO Salary= 150,000 Direct labor= 270,000 Factory rent= 400,000 Factory supervisor salaries= 220,000 Plant &machine depreciation= 720,000 Plant utilities (all variable)= 80,000 Radio advertising= 370,000 Raw materials= 450,000 Sales commissions= 110,000 Total Cost= 2,770,000 Net Operating Income= $730,000
Please show work so i can learn how to do this.
1. Compute the total manufacturing cost per unit.
2. Compute the gross margin per unit
3. Compute the contribution margin per unit
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