Subjects accounting

Cost Analysis

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Cost Analysis


1. **State the problem:** We need to find the missing values in the table: Unit Variable Cost, Total Revenue, Level of Output, Contribution Rate (%), and Unit Contribution Margin. 2. **Given data:** - Total Fixed Costs (TFC) = 5985 - Total Variable Costs (TVC) = 6863 - Selling Price (SP) = 10.00 - Net Income (NI) = 3498 3. **Formulas and important rules:** - Total Revenue (TR) = Selling Price × Level of Output - Total Costs (TC) = Total Fixed Costs + Total Variable Costs - Net Income = Total Revenue - Total Costs - Unit Variable Cost (UVC) = Total Variable Costs ÷ Level of Output - Unit Contribution Margin (UCM) = Selling Price - Unit Variable Cost - Contribution Rate (%) = (Unit Contribution Margin ÷ Selling Price) × 100 4. **Find Level of Output (Q):** Using Net Income formula: $$NI = TR - TC = (SP \times Q) - (TFC + TVC)$$ Rearranged: $$3498 = 10Q - (5985 + 6863)$$ $$3498 = 10Q - 12848$$ $$10Q = 3498 + 12848 = 16346$$ $$Q = \frac{16346}{10} = 1634.6$$ 5. **Calculate Total Revenue (TR):** $$TR = SP \times Q = 10 \times 1634.6 = 16346.00$$ 6. **Calculate Unit Variable Cost (UVC):** $$UVC = \frac{TVC}{Q} = \frac{6863}{1634.6} \approx 4.20$$ 7. **Calculate Unit Contribution Margin (UCM):** $$UCM = SP - UVC = 10.00 - 4.20 = 5.80$$ 8. **Calculate Contribution Rate (%):** $$Contribution\ Rate = \frac{UCM}{SP} \times 100 = \frac{5.80}{10.00} \times 100 = 58.00\%$$ **Final answers rounded to two decimals:** - Unit Variable Cost = 4.20 - Total Revenue = 16346.00 - Level of Output = 1634.60 - Contribution Rate = 58.00% - Unit Contribution Margin = 5.80