Question

1) Rotide Inc. produces one type of product. Each unit requires $4,675 in variable costs and $1,650 in fixed costs. Currently, the breakeven point is 550 units. If Rotide Inc. produces one more unit, how much will the 551st unit sold contribute to the company's income?

Based on the following information, what is the contribution margin percentage?

Sales revenue	Variable cost	Fixed cost	Total cost	Contribution margin
?	$198,000	?	$300,600	$162,000

Answer 1

1)				At	At
			Per unit	550 units	551 units
	Sales		$ 6,325.00	$ 34,78,750.00	$ 34,85,075.00
	Variable cost		$ 4,675.00	$ 25,71,250.00	$ 25,75,925.00
	Contribution Margin		$ 1,650.00	$   9,07,500.00	$   9,09,150.00
	Fixed Cost			$   9,07,500.00	$   9,07,500.00
	Income			$                     -	$        1,650.00
	Therefore, we can see that selling 1 unit extra will give the company
	income of $ 1650

2)	Sales Revenue		=	Variable Cost + Contribution Margin
			=	$ 198000 + $ 162000
			=	360000
	Contribution Margin %		=	Contribution Margin / Sales
			=	$ 162000 / $ 360000
			=	45% or 0.45