Question

Contribution Margin Molly Company sells 32,000 units at $25 per unit. Variable costs are $14.00 per unit, and fixed costs are $130,200. Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) income from operations. a. Contribution margin ratio (Enter as a whole number.) X % b. Unit contribution margin (Round to the nearest cent.) per unit C. Income from operations . Feedback

Answer 1

a		Contribution Margin Ration=	Sales-Variable cost
			Sales
		Contribution Margin Ration=	800,000-448,000
			800,000
		Contribution Margin Ration=	352,000
			800,000
		Contribution Margin Ration=	44%
	Cell Reference	Particulars	Amount $
	A	No of units sold	32,000
	B	Sale price per unit	25
	C=A*B	Sales value	800,000
	D	Variable cost per unit	14
	E=A*D	Variable cost for all unit sold	448,000
	F=C-E	Contribution	352,000
b	b Unit contribution margin
	It is nothing but sales price per unit- variable cost per unit
	Cell Reference	Particulars	Amount $
	A	Sale price per unit	25
	B	Variable cost per unit	14
	C=A-B	Unit contribution margin per unit	11
c	Computation of income from operation
	Cell Reference	Particulars	Amount $
	A	Revenue	800,000
	B	Variable cost	448,000
	C	Fixed cost	130,200
	D=A-B-C	Income from operation	221,800