Accounting homework help total fixed costs, variable cost per unit

Posted on 2014-03-29 07:01:00 in Accounting by TEHAPPLE

4. Firebird has a contribution margin of 50% and must sell 25,000 units at a price of $80 to break even. Their real level of sales is very close. Their margin of safety was $100,000. They are contemplating leasing a new machine, which would increase fixed costs by $20,000 but increase contribution margin to 52%. This problem includes 3 different levels of operations: breakeven, actual, potential, and make a column for each. Compute the following.



A. Total fixed costs (breakeven total)

B. Variable Cost per unit. (breakeven per unit)

C. Operating Income (Actual)

D. Should they lease the new machine? Show your work. (potential)

E. What would you tell your boss about the benefits of variable costing?

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