The Following Information Is for a Product Manufactured and Sold

question 29

Essay

The following information is for a product manufactured and sold by Drake Company:
Sales price per unit: $100
Variable cost per unit: $30
Total annual fixed costs: $350,000
Required:
1)Calculate the contribution margin per unit.
2)How many units must Crane sell to break even?
3)How many units must Crane sell to achieve a profit of $35,000?

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Definitions:

Prime Cost

The combined direct costs of manufacturing a product, specifically direct materials and direct labor.

Plant Janitor's Wages

The compensation paid to janitorial staff responsible for cleaning and maintaining industrial or manufacturing facilities.

Direct Labor Wages

The compensation paid to employees who are directly involved in the production of goods or the provision of services.

Conversion Costs

The costs incurred to convert raw materials into finished products, typically including labor and manufacturing overhead.