Question:
Ace Company produces a product that sells for $142 per unit. Ace In June and July, the first two months of production, Ace produced and sold 6,000 and 7,000 units, respectively, with costs as follows:
June July
Production and sales volume (units) 6,000 7,000
Cost of Sales $ 347,500 405,300
Selling and administrative costs $ 436,800 458,500
a) Evaluate the variable cost per unit.
b) Determine the total fixed cost per month.
c) What is the contribution margin per unit made and sold?
d) Show a formula to evaluate the total costs at other activity levels, defining your terms, and identify any facts assumed by your assumption.
e) Check the method you used to make your estimate, and any other possible methods, and state the advantages of each