Question

The following totals are used to create a CVP Income Statement for Frederick Company for FY2018:

Frederick Company
Selected Financial Figures
For the Year Ended 12/31/18
Sales (100 units)		$10,000
Variable Costs:
Direct Labor	$1,300
Direct Materials	1,100
Factory Overhead (variable)	2,000
Selling Expenses (variable)	600
Administrative Expenses (variable)	500
Fixed Costs:
Factory Overhead (fixed)	$550
Selling Expenses (fixed)	1,000
Administrative Expenses (fixed)	1,000

Frederick Company utilizes a JIT production system and there are no Raw Materials, Work-in-Process or Finished Goods inventories. Use this information to determine FY 2018 Contribution Margin Percentage. Enter percentage to one decimal place. (example enter 35.5% as 35.5)

Answer 1

Correct Answer:

Contribution margin %

45.0%

working:

A	Sales		$               10,000
	Less Variable cost :
	Direct material	$          1,300
	Direct labour	$          1,100
	Factory oh (variable)	$          2,000
	Selling Expenses (Variable)	$              600
	Administrative expenses (variable)	$              500
B	Total variable cost		$                 5,500
C =A-B	Contribution margin		$                 4,500
D =C/A *100	Contribution margin %		45.0%

End of answer.

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