1_ Willie Company sells 15,000 units at $49 per unit. Variable costs are $36.26

Question

1_ Willie Company sells 15,000 units at $49 per unit. Variable costs are $36.26 per unit, and fixed costs are $101,300.

Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) income from operations.

2_ The manufacturing costs of Fuld Industries for three months of the year are provided below.

Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost. Round all answers to the nearest whole dollar.

a. Contribution margin ratio (Enter as a whole number.) ........... % b. Unit contribution margin (Round to the nearest cent.) $............ per unit c. Income from operations $............

Explanation / Answer

1.

c.Income from operations(Contribution margin per unit*Units sold)-Fixed costs

=(12.74*15000)-101300

2.

Variable cost per unit=[Total cost at highest level-Total cost at lowest level]/(Highest level-Lowest level)

=(585480-376380)/(5945-1845)=$51 per unit

Total fixed cost=585480-(51*5945)=$282285

a.Contribution margin ratio(Contribution margin/Sales)(49-36.26)/49 26% b.Contribution margin per unit(Sales-Variable costs)(49-36.26) $12.74

c.Income from operations(Contribution margin per unit*Units sold)-Fixed costs

=(12.74*15000)-101300

$89800

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