Homework Answers
Solution:
Calculation of Contribution Margin per Unit :
The formula for calculating contribution margin per unit is
= Selling price per unit – Variable cost per unit
As per the information given in the question we have
Selling price per unit = $ 10.60 ; Variable cost per unit = $ 5.60
Thus the contribution margin per unit = $ 10.60 - $ 5.60 = $ 5
Calculation of expected Contribution Margin per Unit :
The formula for calculating the expected total contribution margin is
= ( Contribution margin per unit * No. of sale units ) – Fixed costs
As per the information given in the question we have
Contribution margin per unit = $ 5 ; No. of sale units = 24,600 towels ; Fixed costs = $ 66,000
Applying the above information we have expected total contribution margin as
= ( $ 5 * 24,600 ) - $ 66,000
= $ 123,000 - $ 66,000
= $ 57,000
Thus Surf and Sand’s the expected total contribution margin is = $ 57,000
The solution is option 4 = $ 57,000
Add Answer to:
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