1.Example 7.5 Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Required: Check your answer by preparing a contribution margin income statement based on the number of units calculated.
2. Solve the following independent problems. Required: Andromeda Company’s break-even point is 2,400 units. Variable cost per unit is $42; total fixed costs are $67,200 per year. What price does Andromeda charge?
3. Zero coupon bonds pay no interest—the only cash investors receive is the lump-sum principal payment at maturity. On January 1, 2019, The Ledge Inc. issued $250 million of zero coupon bonds at a maturity yield rate of 10%. The bonds mature in 20 years. What was the January 1, 2039, issue price of these zero coupon bonds?
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