Question

Bluegill Company sells 12,800 units at $380 per unit. Fixed costs are $243,200, and operating income is $1,216,000. Determine the following: a. Variable cost per unit b. Unit contribution margin per unit c. Contribution margin ratio %

Answer 1

Answer :

1 (a) Variable cost per unit = $ 266

1 (b) Unit contribution margin = $ 114

1 (c) Contribution margin ratio = 30%

Explanation

Total contribution = Fixed cost + operating profit

= $ 243200 + $ 1216000

= $ 1459200

Unit contribution margin = Total contribution / total unit sold

= $ 1459200 / 12800 unit

= $ 114

Variable cost per unit = Sales per unit - Unit contribution margin

= $ 380 - $ 114 = $ 266

Contribution margin ratio = Contribution *100 / sales

= $ 114*100 / $ 380

= 30%

(2) Activity rate for set up = (c) $ 5.41

Explanation

Activity rate for set up = Budgeted activity cost / Total activity base

= $ 55700 / 10300

= $ 5.41 ( Approx to 2 Decimal place )

3(a) Cost of goods manufactured = $ 78047

3 (b) Cost of goods sold = $ 76573

Explanation

Direct material Used in production	$ 16217
Direct Labor	$ 24414
Factory overhead	$ 38036
Total manufacturing cost	$ 78667
Add - Opening wip	$ 20581
Less - Closing wip	$ 21201
Cost of goods manufactured	$ 78047
Add- Opening Finished goods	$ 24026
Less - Closing Finished goods	$25500
Cost of goods sold	$ 76573