Please help me answer these questions 1. A manufacturer of cedar shingles has su

Question

Please help me answer these questions

1. A manufacturer of cedar shingles has supplied the following data:

The company's contribution margin ratio is closest to:

Multiple Choice

72.6%

65.7%

34.3%

27.4%

2. Compton Corporation is a wholesale distributor of educational CD-ROMs. The company's records indicate the following:

Using the high-low method of analysis, what are the company's estimated total fixed selling and administrative expenses per year? (Round your intermediate calculations to 2 decimal places.)

Garrison 16e Rechecks 2017-08-04

Multiple Choice

$60,000

$174,000

$150,000

$162,000

Bundles of cedar shakes produced and sold $ 360,000 Sales revenue $ 2,412,000 Variable manufacturing expense $ 1,170,000 Fixed manufacturing expense $ 714,000 Variable selling and administrative expense $ 414,000 Fixed selling and administrative expense $ 82,000 Net operating income $ 32,000

Explanation / Answer

Answer 1: The contribution margin ratio would be calculated as follows: Sales revenue $                         24,12,000.00 Less: Variable expenses Variable manufacturing expense $              11,70,000.00 Variable selling and administrative expense $                4,14,000.00 $                         15,84,000.00 Contribution margin $                           8,28,000.00 (2,412,000-1,584,000) Less: Fixed expense Fixed manufacturing expense $                7,14,000.00 Fixed selling and administrative expense $                   82,000.00 $                           7,96,000.00 Net operating Income $                              32,000.00 (828,000-796,000) Contribution margin ratio =Contribution margin/Sales Revenue =828,000/2,412,000 34.3% Answer: The company's contribution margin ratio is closest to 34.3% (i.e. Option 3) Answer 2: The company's total fixed selling and administrative expenses would be calculated as follows: Particulars Fixed selling and administrative expenses Number of units sold High $                2,22,000.00                               2,50,000.00 Low $                2,10,000.00                               2,00,000.00 Difference $                   12,000.00 $                              50,000.00 (222,000-210,000) (250,000-200,000) Selling and administrative cost per unit                                 0.24 (12,000/50,000) Unit sold 250000 Selling and administrative cost per unit $                             0.24 Variable selling expense $                   60,000.00 Fixed selling and administrative expense =Total selling and administrative expenses - Variable selling and administrative expense =$222,000-60,000 $                1,62,000.00 The company's estimated total fixed selling and administrative expenses per year is $162,000 (i.e. option 4)

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