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Tableau DA 18-1: Quick Study, Contribution margin and break-even LO A1, P2

Total Fixed Costs

Factory Rent Expense: $10,250,000

Insurance Expense: $6,000,000

Equipment (Straight-line) Depreciation: $5,350,000

Production Manager Salaries: $8,500,000

Advertising Expense: $5,000,000

Variable Costs Per Unit:

Battery: $10

Camera: $45

Internal Components: $90

Receiver: $35

Screen: $95

Speaker: $25

Sales Price Per Unit: $750

Our team is hired by Apple to help assess whether or not to continue to manufacture and sell an older model of the iPhone. Apple explains that this model continues to sell well in foreign markets but it worries that fixed costs are so large that it is difficult to earn a profit. The Tableau Dashboard is provided to aid our analysis of this model. Total Fixed Costs Factory rent expense Insurance expense Equipment depreciation expense Production manager salaries Advertising expense Variable Costs Per Unit Internal Components Battery Camera Receiver Screen Speaker Sales Price Per Unit iPhone #tableau K 8 Po 1. Compute the contribution margin per unit. Contribution margin 2. Compute the contribution margin ratio. Choose Numerator: Choose Denominator: = Contribution Margin Ratio Contribution margin ratio 0 3. Compute break-even point in sales dollars. Choose Numerator: 1 Choose Denominator: = Break-Even Dollars Break-even dollars

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