Question

Contribution Margin Harry Company sells 21,000 units at $30 per unit. Variable costs are $25.50 per unit, and fixed costs are $31,200. Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) operating income. a. Contribution margin ratio (Enter as a whole number.) % b. Unit contribution margin (Round to the nearest cent.) $ per unit c. Operating income $

Answer 1

Number of units sold = 21,000

Selling price per unit = $30

Variable cost per unit = $25.50

Fixed cost = $31,200

b.

Contribution margin per unit = Selling price per unit - Variable cost per unit

= 30 - 25.5

= $4.5

a.

Contribution margin ratio = Contribution margin per unit /Selling price per unit

= 4.5/30

= 15%

c

Contribution format income statment

Sales (21,000 x 30)	630,000
variable cost(21,000 x 25.50)	-535,500
Contributin margin	94,500
Fixed cost	-31,200
Operating incom	$63,000

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