[crazyhorse]

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?

[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%