Question

High Tech Manufacturing manufactures 256GB SD cards​ (memory cards for mobile​ phones, digital​ cameras, and other​ devices). Price and cost data for a relevant range extending to​ 200,000 units per month are as​ follows:

High Tech Manufacturing manufactures 256GB SD cards (memory cards for mobile phones, digital cameras, and other devices). Price and cost data for a relevant range extending to 200,000 units per month are as follows: (Click the icon to view the data.) Read the requirements. Requirement 1. What is the company's contribution margin per unit? Contribution margin percentage? Total contribution margin? Begin by identifying the formula. = Contribution margin per unit The contribution margin per unit is $ What is the company's contribution margin percentage? Begin by identifying the formula. ) = Contribution margin percentage (Round your answer to the nearest whole percent.) The contribution margin percentage is %. What is the company's total contribution margin? Begin by identifying the formula Contribution margin The total contribution margin is $

Answer 1

Requirement 1: Contribution Margin per Unit = Sales price per unit - Variable cost per unit Variable cost Direct material + Direct labor + Variable manufacturing overhead + Variable selling and administrative expenses $7.60 +6.00 + 4.40 + 3.00 $ 21.00 Per unit Therefore, Contribution Margin per Unit Contribution Margin per Unit = = $ $25 - 21 4.00 Per unit Contribution Margin Percentage Contribution Margin per Unit Sales price per unit 4.00 25.00 16% Contribution Margin Percentage Total Contribution Margin Contribution Margin per Unit X Units sold $4 X 110,000 $ 4,40,000 Total Contribution Margin Amount (A) (140,000 X $25) $ 35,00,000 (B) Requirement 2: Particulars Sales Less: Variable Costs Direct Material Direct Labor Variable manufacturing overhead Variable selling and administrative expenses Total Contribution Margin (C) = (A)-(B) Less: Fixed Expenses Fixed Manufacturing overhead Fixed selling and administrative expenses Operating Income (E) = (C)-(D) (140,000 X $7.6) (140,000 X $6) (140,000 X $4.4) (140,000 X $3) 10,64,000 8,40,000 6,16,000 4,20,000 5,60,000 $ (D) 1,11,600 1,67,400 $ 2,81,000

Amount (180,000 X $25) $ 45,00,000 (A) (B) Requirement 3: Particulars Sales Less: Variable Costs Direct Material Direct Labor Variable manufacturing overhead Variable selling and administrative expenses Total Contribution Margin (C) = (A)-(B) Less: Fixed Expenses Fixed Manufacturing overhead Fixed selling and administrative expenses Operating Income (E) = (C)-(D) (180,000 X $7.6) (180,000 X $6 (180,000 X $4.4) (180,000 X $3) 13,68,000 10,80,000 7,92,000 5,40,000 7,20,000 $ (D) 1,11,600 1,67,400 $ 4,41,000 Requirement 4: Break-even sales per units Fixed Cost Contribution per unit - $ 2,79,000 Break-even sales per units 4 69,750 Break-even sales Fixed Cost Contribution margin percentage $ = 2,79,000 16% Break-even sales = $ 17,43,750 Requirement 5: Target Sales in units Fixed cost + Target profit Contribution per unit $279,000 + 260,100 5,39,100 Target Sales in units 1,34,775