Question

2) Carver Corporation produces a product which sells for $40. Variable manufacturing costs are $18 per unit. Fixed manufacturing costs are $5 per unit based on the current level of activity, and fixed selling and administrative costs are $4 per unit. A selling commission of 15% of the selling price is paid on each unit sold. The contribution margin per unit is: 3) Thomason Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (1,000 units) Variable expenses Contribution margin Fixed expenses Net operating income 40,000 30,000 10,000 7,000 3,000 $ If the variable cost per unit increases by $1, spending on advertising increases by $2,000, and unit sales increase by 50 units, the net operating income would be closest to:

Answer 1

2) Contribution margin per unit

Selling price per unit	40
Variable manufacturing cost	-18
Selling commission (40*15%)	-6
Contribution margin per unit	16

3) Calculate net operating income

Sales (1050*40)	42000
Variable cost (1050*31)	32550
Contribution margin	9450
Fixed cost (7000+2000)	9000
Net operating income	450