Phoenix Corporation manufactures smartphones, generally selling from 200,000 to 300,000 units per year. The following cost data apply to the activity levels shown:Number of Units200,000250,000300,000Total costs??? Fixed$ 15,000,000?? Variable24,000,000??Total costs$ 39,000,000??????Cost per Unit??? Fixed$ 75?? Variable120??Total cost per unit$ 195??Required: 1.) Complete the preceding table by filling the missing amounts for 250,000 and 300,000 units.2.) Assume that Phoenix actually makes 280,000 units. What would be the total costs and the cost per unit at this level of activity? (Round the cost per unit to two decimal points)3.) If Phoenix sells each unit for $220, what is Phoenix's magnitude of
operating leverage at sales of 280,000 units? (Round to two decimal points.)
What will be an ideal response?
1.)
| Number of Units | 200,000 | 250,000 | 300,000 |
| Total costs | ? | ? | ? |
| Fixed | $ 15,000,000 | $ 15,000,000 | $ 15,000,000 |
| Variable | 24,000,000 | $ 30,000,000 | $ 36,000,000 |
| Total costs | $ 39,000,000 | $ 45,000,000 | $ 51,000,000 |
| ? | ? | ? | ? |
| Cost per Unit | ? | ? | ? |
| Fixed | $ 75 | 60 | 50 |
| Variable | 120 | 120 | 120 |
| Total cost per unit | $ 195 | $ 180 | $ 170 |
Cost per unit = $48,600,000 ÷ 280,000 units = $173.57
3.) Sales = $220 × 280,000 = $61,600,000
Contribution margin = $61,600,000 - ($120 × 280,000) = $28,000,000
Net income = $28,000,000 - $15,000,000 = $13,000,000
Operating leverage = $28,000,000 ÷ $13,000,000 = 2.15
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