Question:

Ace Company produces a product that sells for $142 per unit. Ace In June and July, the first 2 months of production, Ace produced and sold 6,000 and 7,000 units, correspondingly, with costs as follows:

                                                                                   June                                July

Production and sales volume (units)                  6,000                              7,000

Cost of Sales                                                            $ 347,500                      405,300

Selling and administrative costs                          $ 436,800                      458,500

a) Evaluate the variable cost per unit.

b) Estimate the net fixed cost per month.

c) What is the contribution margin per unit made and sold?

d) Show a formula to evaluate the total costs at other activity levels, defining your terms, and check any facts assumed by your assumption.

e) Classify the method you used to make your evaluate, and any other possible methods, and state the advantages of each