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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