Question

SpeedCo. 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: LOADING...​(Click the icon to view the​ data.) Read the requirementsLOADING.... Requirement 1. What is the​ company's contribution margin per​ unit? Contribution margin​ percentage? Total contribution​ margin? Begin by identifying the formula. Sales price per unit – Variable cost per unit = Contribution margin per unit The contribution margin per unit is $ 6.50 . What is the​ company's contribution margin​ percentage? Begin by identifying the formula. ( Contribution margin per unit / Sales price per unit ) = Contribution margin percentage ​(Round your answer to the nearest whole​ percent.) The contribution margin percentage is 26 %. What is the​ company's total contribution​ margin? Begin by identifying the formula. Sales revenue – Variable expenses = Contribution margin The total contribution margin is $ 910,000 . Requirement 2. What would the​ company's monthly operating income be if the company sold 170 comma 000 ​units? Use the following table to compute the operating income if 170 comma 000 units are sold. Less: ▼

Sales price per unit:

(current monthly sales volume is 140,000 units). . . .

$25.00

Variable costs per unit:

Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$7.80

Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$6.00

Variable manufacturing overhead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2.60

Variable selling and administrative expenses. . . . . . . . . . . . . . . . . . . . . . . . .

$2.10

Monthly fixed expenses:

Fixed manufacturing overhead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$292,000

Fixed selling and administrative expenses. . . . . . . . . . . . . . . . . . . . . . . . . . .

$447,200

Answer 1

Variable cost changes with change in volume while fixed cost remains same within the relevant range
Calculation of Operating Income:
Sales Revenue	4,250,000
Less: Variable cost
Direct Material	1,326,000
Direct Labor	1,020,000
Variable manufacturing overhead	442,000
Velling Selling and Admin Expenses	357,000
Total Variable expenses	3,145,000
Contribution Margin	1,105,000
Fixed expenses:
Fixed Manufacturing Overhead	292,000
Fixed Selling and Admin Expenses	447,200
Net Operating Income	365,800
Hence, the Operating income will be $365,800

It can also be calculated as Sales Revenue*CM % - Fixed costs