Compton Corporation is a wholesale distributor of educational CD-ROMs. The company's records indicate the following: This...
Compton Corporation is a wholesale distributor of educational CD-ROMs. The company's records indicate the following:
| This Year | Last Year | |||||
| Units Sold | 250,000 | 200,000 | ||||
| Sales | $ | 1,250,000 | $ | 1,000,000 | ||
| Cost of goods sold | 875,000 | 700,000 | ||||
| Gross margin | 375,000 | 300,000 | ||||
| Selling and administrative expenses | 222,000 | 210,000 | ||||
| Net operating income | $ | 153,000 | $ | 90,000 | ||
What is the company's contribution margin for this year?
Homework Answers
Calculate contribution margin this year :
Variable cost per unit selling and administrative expense = 12000/50000 = 0.24 per unit
Contribution margin = Sales-Variable cost
= 1250000-(3.74*250000)
Contribution margin = 315000
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