Chilton, Inc. sold 11,300 units last year for $20 each. Variable costs per unit
ID: 2333997 • Letter: C
Question
Chilton, Inc. sold 11,300 units last year for $20 each. Variable costs per unit were $3.00 for direct materials, $2.10 for direct labor, and $3.70 for variable overhead. Fixed costs were $60,100 in manufacturing overhead and $40,600 in nonmanufacturing costs.
a. What is the total contribution margin? (Round your intermediate calculations to 2 decimal places.)
b. What is the unit contribution margin? (Round your answer to 2 decimal places.)
c. What is the contribution margin ratio? (Round your intermediate calculations and final answer to 2 decimal places.)
d. If sales increase by 2,070 units, by how much will profits increase? (Round your intermediate calculation to 2 decimal places and final answer to the nearest dollar amount.)
Explanation / Answer
Selling Price per unit = $20 per unit
Total Variable cost per unit = $3.00 + 2.10 + 3.70= $8.80 per unit
Contribution per unit = Selling price per unit – Contribution per unit
= $20.00 - $8.80
= $11.20 per unit
(a)-Total Contribution Margin
Total Contribution Margin = Sales Unit x Contribution per unit
= 11,300 units x $11.20 per unit
= $126,560
(b)-Unit contribution margin
Unit contribution margin = $11.20 per unit
(c) -Contribution margin ratio
Contribution margin ratio = [Contribution per unit/Selling price per unit] x 100
= [$11.20 / 20] x 100
= 56%
(b)-Increase in Profit
Total Profit at 11,300 Units = [11,300 x $11.20] – [$60,100 + 40,600]
= $126,560 – 100,700
= $25,860
Total Profit at 13,370 Units = [(11,300 + 2070) x $11.20] – [$60,100 + 40,600]
= $149,744 - 100,700
= $49,044
A Profit of $23,184 will increase if the sales unit increased by 2,070 units [$49,044 – 25,860]
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.