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The Janesky Company has collected data on the manufacture of 4,644 robot grippers last month
The Janesky Company has collected data on the manufacture of 4,644 robot grippers last month. The breakdown of total costs is shown below. They now need to plan for future months.
Units sold last month4,644
Direct materials$413,409
Direct labor$296,661
Manufacturing variable overhead$155,063
Selling and administrative costs$428,474
What would be the break even price to produce and sell 6,642 units in the coming month?
Expert Solution
Computation of Break even price to produce and sell 6,642 units in the coming month:
| Computation of Variable Cost: | |||
| Particulars | Total Cost | Per Unit Cost | |
| Direct Materials | $413,409 | 89.02 | =413409/4644 |
| Direct Labor | $296,661 | 63.88 | =296661/4644 |
| Manufacturing Variable Overheads | $155,063 | 33.39 | =155063/4644 |
| Total Variable Cost | $865,133 | 186.29 |
Required Contribution = Fixed Cost/Units to be Sold = $428,474/6,642 = $64.51
Breakeven Price = $186.29+$64.51 = $250.80
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