[crazyhorse]

I had asked his question and you had answered this question as follows... I also worked on something and I am posting my answer, could you please check and let me know where I am wrong/right...

A title manufacturer has supplied the following data:

Boxes of tiles produced and sold 240,000
Sales revenue $1,128,000
Variable manufacturing expense 456,000
Fixed manufacturing expense 320,000
Variable selling and administrative expense 156,000
Fixed selling and administrative expense 96,000
Net operating income $100,000


a) What is the company’s unit contribution margin?
b) What is the company’s contribution margin ratio?
_____________________________
May 27, 2006, 10:29 PM
CaptainForest

a) What is the company’s unit contribution margin?

Sales revenue ($1,128,000 / 240,000) = 4,7x
Variable manufacturing expense 456,000 / 240,000 = 1.9x
Fixed manufacturing expense 320,000
Variable selling and administrative expense 156,000 / 240,000 = 0.65 x
Fixed selling and administrative expense 96,000
Net operating income $100,000

company’s unit contribution margin = 4.7 – 1.9 = $2.8 per unit

b) What is the company’s contribution margin ratio?

contribution margin ratio = contribution margin / sales
= 2.8 / 4.7
= 59.57%

My answer is ::::::::::::::::::::::::::::
A. Eq. Unit of Prod. - Material Conversion
Op. WIP 60 540
Unit started 22500 22500
End WIP 350 350
Total 22910 23390

B. Cost per Eq, Unit Material Conversion
71021/22910 542648/23390
=$3.10 $23.20



Please advise its urgent
thanks

[CaptainForest]

Your question asked for the company's contribution margin, which is what I calculated.

Your answer appears to be calculating the COGS or something.


Unit Contribution Margin = Unit Sales Price - Unit Variable Cost


Upon looking over my answer, I realized I did not include all Variable Costs. I should have also included:

Variable selling and administrative expense 156,000 / 240,000 = 0.65 x

So,

Units Sales Price is 4.7x
Unit Variable Cost is 1.9x + 0.65x = 2.55x

Therefore, CM is 4.7-2.55 = $2.15/unit

Part B:
What is the company's contribution margin ratio?

Contribution Margin Ratio is calculated by dividing the Contribution Margin (2.15 in this case) by the sales (4.7 in this case).

So,

company's contribution margin ratio = 2.15/4.7 = 45.74%

Note: Contribution Margin ratio is always expressed as a percentage, so you multiple the final answer by 100 to get the percentage (2.15/4.7 = .4574 x 100 = 45.74%)