Question

Dakota Company provides the following information about its single product: Targeted operating income $40,000 Selling price per unit $3.50 Variable cost per unit $1.05 Total fixed costs $90,000 What is the contribution margin ratio? O 44% O 30% O 70% O 56%

Answer 1

Q1)

ContributionMargin ratio = [(SP – VC per unit) / SP] × 100

                                          = [(3.50 – 1.05) / 3.50] × 100

                                          = (2.45 / 3.50) × 100

                                          = 70%

Answer: 3^rd option

Q10)

Total variable cost (TVC) = TC – FC

                               = 378,000 – 300,000

                               = 78,000

VC per unit = TVC / Units

                        = 78,000 / 40,000

                        = 1.95

Answer: 4^th option

Q3)

Contribution per unit = Price – VC per unit

                                    = 20 – 8

                                    = 12

Answer: 4^th option

Q4)

Contribution per unit = Price – VC per unit

                                    = 20 – 8

                                    = 12

BEP (in $) = (FC / Contribution per unit) × Price per unit

                  = (15,000 / 12) × 20

                  = 25,000

Answer: 1^st option