Question

Show All Your Works For Your Response: Calculate Contribution margin ratio, Contribution margin, Operating income GigaCo Manufacturing manufactures 256GB SD cards (memory cards for mobile phones, digital cameras, and other devices). Price and cost data for a relevant range extending to 200,000 units per month are as follows: A Data Table 20.00 7.40 5.00 Sales price per unit: (current monthly sales volume is 120,000 units) .... $ Variable costs per unit: Direct materials .................................... $ Direct labor Variable manufacturing overhead ............................. $ Variable selling and administrative expenses .................. ...$ Monthly fixed expenses: Fixed manufacturing overhead ... $ Fixed selling and administrative expenses ......... $ 2.20 1.40 191,400 276,600 Requirement 3. What would the company's monthly operating income be if the company had sales of $4,500,000? Use the following table to compute the operating income with sales totaling $4,500,000. (Enter the contribution margin ratio to the nearest whole percent.) Sales revenue $ 4,500,000 Contribution margin ratio Contribution margin Less: Fixed expenses Operating income

Answer 1

Contribution Margin Perr Unit = Selling Price - Variable Cost per Unit

Variable Cost Per Unit = 7.40+5.00+2.20+1.40 =$16.00 Per Unit

Selling Price = 20

Contibution MARgin Per Unit = 20-16 = $4 Per unit

Cintribution MArgin ratio = Contrbution MArgin / Selling Price = $4 /20 = 20%

Total Fixed cost = 191400+276600 = $ 468,000

Sales Revenue	4,500,000
Contibution Margin ratio	20%
Contibution Margin ( 4500,000*20%)	900,000
Less : Fixed Expenses	468,000
Operating income	432,000