Question

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Answer 1

1) Contribution Margin for Current Year:
Sales Revenue	$1,440,000
Less: Variable costs:
Direct materials	($504,000)
Direct labor	($169,400)
Selling expenses ($210,000*40/100)	($84,000)
Administrative expenses ($276,000*20/100)	($55,200)
Manufacturing overheads ($382,000*70/100)	($267,400)
Contribution margin	$360,000
Contribution Margin for Projected Year:
Sales Revenue ($1,440,000*110/100)	$1,584,000
Less: Variable costs:
Direct materials ($504,000*110/100)	($554,400)
Direct labor ($169,400*110/100)	($186,340)
Selling expenses ($210,000*40/100 = $84,000*110/100)	($92,400)
Administrative expenses ($276,000*20/100 = $55,200*110/100)	($60,720)
Manufacturing overheads ($382,000*70/100 = $267,400*110/100)	($294,140)
Contribution margin in Projected Year	$396,000
2) Fixed Costs:
Selling expenses ($210,000*60/100)	$126,000
Administrative expenses ($276,000*80/100)	$220,800
Manufacturing overheads ($382,000*30/100)	$114,600
Total fixed costs	$461,400