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Calculate Fixed Costs, Contribution Margin Ratio And Breakeven Point In Sales

Question

Oregon Manufacturing had the following data for the past three months.

 

January

February

March

Sales in units

3000

3,750

4,500

Operating expenses

$272,000

$296,000

$320,000

 

  1. Using the high-low method, estimate Oregon’s total fixed costs, contribution margin ratio and break-even point in sales dollars for April. Oregon expects to sell 5,000 units for $50 per unit (this sales price is unchanged from month to month).
  2. Project net income for April, given the information above and your computations.
  3. Discuss strengths and weaknesses of applying the high-low method. Feel free to use the information provided above in your discussion. How could your analysis of costs be improved?

 

Summary

The question belongs to Accounting and it discusses about calculation of total fixed costs, contribution margin ratio and break-even point in sales, project net income, etc using high-low method.

Total Word Count 414

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