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Budgeted output is 16000 and budgeted contribution is 14$ per unit. Budgeted profit is 140000 and budgeted variable cost are equal to fixed costs, what is the selling price per unit?
Answer 14×16000= 224000 then 140000+224000=364000
364000/16000= 22.75
I am confused how do you find selling price per unit with the above dataThe budgeted contribution = 16,000 x $14 = $224,000.
Profit = contribution – fixed costs, and therefore the fixed cost is 224,000 – 140,000 = $84,000.
Therefore the variable cost also equals $84,000.
Contribution = sales less variable cost, and therefore the sales = 140,000 + 84,000 = $224,000.
There are 16,000 units and therefore the selling price per unit = 224,000 / 16,000 = $14.
Again, why are you attempting questions for which you do not have the answers?
You added 140000+84000,
You shoud add 224000+84000
Because contribution is 224000 not 140000 ,140000 is fixed cost.
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