Question

Bluegill Company sells 14,300 units at $280 per unit. Fixed costs are $200,200, and income from operations is $1,001,000. 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

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

Answer 2 Part 1) 3 Variable cost per unit 4 = selling price - ((fixed cost + income from operations)/ no. of units sold) 5 = 280 - (200200+1001000)/14300) 6 = 280-84 7 = $ 196 8 Thus the variable cost per unit = $ 196 10 Part 2) 11 Unit contribution margin = selling price - variable cost 12 = 280-196 13 = $ 84 15 Thus the unit contribution Margin = $ 84 17 Part 3) 18 Contribution Margin Ratio = Contribution Margin / selling price 19 = 84/280*100 20 = 30% 22 Thus the correct answer is contribution margin 30% 23