Question

Bluegill Company sells 15,700 units at $360 per unit.. Fixed costs are $282,600, and income from operations is $1,413,000. Determine the following: Round the contribution margin ratio to two decimal places. a. Variable cost per unit b. Unit contribution margin per unit c. Contribution margin ratio

Answer 1

a.

Number of units sold = 15,700

Selling price per unit = $360

Fixed costs = $282,600

Operating income = $1,413,000

Let the Variable cost per unit be $K

Operating income = Sales - Variable costs- Fixed costs

1,413,000 = (15,700 x 360) - 15,700K - 282,600

15,700K = 3,956,400

K = $252

Variable cost per unit = $252

b.

Unit contribution margin = Selling price per unit - Variable cost per unit

= 360-252

= $108 per unit

c.

Contribution margin ratio = Unit contribution margin/Selling price per unit

= 108/360

= 30%

Variable cost per unit	$252
Unit Contribution margin	$108 per unit
Contribution margin rate	30%

Kindly give a positive rating if you are satisfied with this solution and please ask if you have any query.

Thanks