Question

Contribution Margin Sally Company sells 30,000 units at $49 per unit. Variable costs are $29.40 per unit, and fixed costs are $341,000. Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) income from operations. a. Contribution margin ratio (Enter as a whole number.) b. Unit contribution margin (Round to the nearest cent.) per unit c. Income from operations

Answer 1

Correct Answer:

Unit Contribution margin

$                 19.60

b) Contribution margin ratio

40.0%

Income from operations

$           247,000

Working:

	Unit Sales	per unit
A	Selling Price per unit	$                 49.00
B	Variable expenses per unit	$                 29.40
C = A-B	Unit Contribution margin	$                 19.60
D = C/A *100	Contribution margin ratio	40.0%

Income statement
units	30,000
Sales revenue	$        1,470,000
Less: variable expenses	$           882,000
Contribution margin	$           588,000
Less: fixed cost	$           341,000
Income from operations	$           247,000

End of answer.

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