Tweety Company manufactures one model of birdbath, which is very popular. Tweety
ID: 2373615 • Letter: T
Question
Tweety Company manufactures one model of birdbath, which is very popular. Tweety sells all units it produces each month. The relevant range is 0-2000 units, and monthly production costs for the production of 1,600 units follow. Tweety%u2019s utilities and maintenance costs are mixed with the fixed components shown in parentheses.
Calculate the unit contribution margin and contribution margin ratio for each birdbath sold. (Round your answers to 2 decimal places. Omit the "$" & "%" signs in your response.)
Prepare a contribution margin income statement assuming that Tweety produces and sells 1,800 units.(Round your Variable cost per unit to 2 decimal places and Total variable cost to nearest whole dollar amount. Input all amounts as positive values. Omit the "$" signs in your response.)
Tweety Company
Contribution Margin Income Statement
Expected for 1,800 Units
Tweety Company manufactures one model of birdbath, which is very popular. Tweety sells all units it produces each month. The relevant range is 0-2000 units, and monthly production costs for the production of 1,600 units follow. Tweety%u2019s utilities and maintenance costs are mixed with the fixed components shown in parentheses.
Explanation / Answer
Unit contribution margin: Total variable cost (2900+7500+[620-140]+[480-310]) = 11,050 / 1600 units = 6.84375 Variable cost per unit 26-6.84 = $19.16 unit contribution margin Contribution margin ratio: 19.16/26 = 73.69% Sales revenue: 26*1800 = $46,800 Variable costs: 6.84*1800 = $12,312 Contribution margin: 46,800-12,312 = $34,488 Fixed costs: 140+3,400+310+700 = 4,550 Income from operations: 34,488-4,550 = $29,938 Hope this helps.
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