A company had sales of $4,600,000 (40,000 units); Variable costs of $60 per unit; and Fixed...
A company had sales of $4,600,000 (40,000 units); Variable costs of $60 per unit; and Fixed costs of $600,000...
-What was the average sale price per unit?
-What was the contribution margin per unit?
-What was the total contribution margin?
-What was the income before taxes for the year?
Homework Answers
(a) Average sale price per unit = Total sales / Total number of units
Average sale price per unit = $4600000 / 40000 = $115 per unit
(b) Contribution margin = Selling price per unit - Variable cost per unit
Contribution margin per unit = $115 - $60 = $55
(c) Total contribution margin = Contribution margin per unit * Total number of units
Total contribution margin = $55 * 40000 = $2200000
(d) Income before taxes = Total contribution margin - Fixed costs
Income before taxes = $2200000 - $600000 = $1600000
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