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Management Accounting - Cost Analysis

Nelson Company manufactures running shoes. The selling price per pair of shoes (one unit) averages $80 and variable costs per pair are $47.50. The sales volume of $776,000 produces $100,750 of net income before taxes.


a. Compute total variable costs.

b. Compute total fixed costs

c. Compute the break-even point in units.

d. Compute the quantity of units above breakeven to reach targeted
net income before taxes.

e. Compute the contribution margin and contribution percentage

Solution Preview

Total Sales = 776,000

Net Income = 100,750

SP = 80

VC = 47.5

a. Compute total variable costs.

Units Sold = total sales / SP = 776,000/80 = 9700

Variable cost (total) = VC/unit x # of units sold ...