The manufacturing costs of Alex Industries for three months of the year are provided below.
Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost. Round all answers to the nearest whole dollar.
|a. Variable cost per unit||$|
|b. Total fixed cost||
Sally Company sells 22,000 units at $18 per unit. Variable costs are $10.8 per unit, and fixed costs are $63,400.
Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) income from operations.
|a. Contribution margin ratio (Enter as a whole number.)||%|
|b. Unit contribution margin (Round to the nearest cent.)||$||per unit|
|c. Income from operations||$|
High low method
variable cost per unit = maximum cost - minimum cost / maximum unit - minimum unit
= 665,840 - 428,040 / 6,355 - 2,255
= 237,800 - 4,100
= 58 per unit
fixed cost = total cost - variable cost
= 665,840 - (6,355 x 58)
= 665,840 - 368,590
contribution margin ratio = contribution margin / sale x 100
= 158,400 / 396,000 x 100
contribution margin = sale - variable cost
= (22,000 x 18) - (22,000 x 10.8)
unit contribution margin = per unit selling price - per unit variable cost
= 18 - 10.8
= 7.2 per unit
|sale (22,000 x 18)||396,000|
|Less: variable cost (22,000 x 10.8)||237,600|
|Less: Fixed cost||63,400|
|income from operation||95,000|
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