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Calculating Costs and Break-Even Night Shades inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $4.68 per unit, and the. Variable labor cost is $2.27 per unit.a. What is the variable cost per unit?b. Suppose NSI incurs fixed costs of $650,000 during a year in which total production is 320,000 units. What are the total costs for the year?c. If the selling price is $11.99 per unit, does NSI break even on a cash basis? If depreciation is $190,000 per year, what is the accounting break-even point?
Answer A Variable Costs Material Cost $ 4.68 Labor Cost $ 2.27 Variable Costs per unit $ 6.95 Answer B Fixed Costs $ 650,000 Variable Costs $ 2,224,000 (320,000 units * $ 6.95 per unit) Total Costs $ 2,874,000 Answer C Selling price per unit $ 11.99 less: Variable Costs per unit $ 6.95 Contribution Margin per unit $ 5.04 Cash Break even = Fixed Costs less Non Cash expenses…

/ Contibution per unit Cash Break even = 650,000 less 190,000 / 5.04 Cash Break even = 91,270 units Accounting Break even point = Fixed Costs/Contribution per unit Accounting Break even point = 650,000/5.04 Accounting Break even point = 128,968 units

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