Mills Manufacturing Inc. had sales for January 2020 of $900,000.
The units sold were 18,000, and the expenses for January 2020 were
as follows:
Variable | Fixed | ||||
Cost of goods sold | $181,800 | $115,200 | |||
Selling expenses | 53,100 | 27,900 | |||
Administrative expenses | 25,200 | 29,700 |
Please find contribution margin per unit and contribution margin ratio.
Total Variable Cost = Cost of Goods sold + Selling Expenses + Administrative Expenses
Total Variable Cost = $181,800+53,100+25,200 = $260,100
Total Sales Revenue = $ 900,000
Contribution Margin = Sales Revenue - Total Variable Cost = 900,000-260,100 = $639,900
1) Contribution Margin Per Unit = Contribution Margin / Units Sold
= $639,900 / 18000
= $35.55 (Answer)
2) Contribution Margin Ratio = Contribution Margin / Revenue
= 639,900 /900,000
= 71.10 % (Answer)
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