Homework Answers
Ans. Contribution margin per unit is the difference between selling price per unit and variable cost per unit.
So, first of all, we need to find out the value of total variable cost per unit.
Total variable cost per unit = Variable manufacturing cost + Sales commissions
= $50 + $10
= $60 per unit
Contribution margin per unit = Sales price - Total variable cost per unit
= $100 - $60
= $40 per unit
Contribution margin ratio = Contribution margin per unit / Sales price * 100
= $40 / $100 * 100
= 40%
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2.What is the contribution margin ratio?
3.What is the variable expense ratio?
4.If sales increase to 1,001 units, what would be the increase
in net operating income?
5.If sales decline to 900 units, what would be the net
operating income?
6.If the selling price increases by $2.50 per unit and the
sales volume decreases by 100 units, what would be the net
operating income?
7.If the variable cost per unit increases by $1.50,...
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