[Nodelle]

An association has the capacity to process 40,000 tons of cotton seed per year. This processing results in several salable products including oil, meal, lint and hulls. A marketing study indicates that the association can sell its output for the coming year at $400 per ton processed.

Cost of cotton seed $160 per ton
Variable $52 per ton
Fixed $680,000 per year
Marketing cost All variable, $88 per ton
Administrative cost All fixed $600,000 per year

Compute the contribution margin
Compute the contribution margin ration per ton of cotton seed processed
Compute the breakeven sales volume in dollars and in tons of cotton seed
Assume that the association's budget calls for an operating income of $480,000, compute the sales volume required to reach this profit objective stated in dollars and in tons of cottonseed.
Compute the maximum amount that the association can afford to pay per ton of raw cottonseed and still break even by processing and selling 16,000 tons during the current year.
Explain the difference between the terms "period cost" and "product costs"

[ArcSine]

Total contribution margin is total revenue less total variable costs. Both tot revenue and tot var costs depend, of course, on the quantity of units processed and sold. The only quantity data provided is the capacity level, so you could compute tot CM based on that.

On the other hand unit contribution margin is independent of quantity. It's just unit revenue (selling price for one ton) less unit variable costs.

The breakeven unit quantity Q is found by where F, p, and v are, respectively, total fixed costs, unit price, and unit variable costs. In other words, divide your total fixed cost by your unit contribution margin.

For break-even sales in terms of dollars, just multiply the break-even tons Q by the price per ton.

For computing the sales level necessary to hit a target net income (480K in this case), simply use the break-even formula above, but first add the target net profit to total fixed costs in the numerator.

That'll get you out of the starting gate on this one. For further guidance, be sure to first check out the forum's homework help rules, then post back with your attempts and calculations.