Respuesta :
Answer:
a. Contribution margin ratio = 25%
b. Unit contribution margin = $15 per unit
c. Income from operation = $20,000
Explanation:
a. What is the contribution margin ratio?
This can be calculated uisng the following formula:
Contribution margin ratio = (TSR - TVC) / TSR ................ (1)
Where;
TSR = Total sales revenue = Selling price per unit * Unit sold = $60 * 4,000 = $240,000
TVC = Total variable cost = Variable cost per unit * Unit sold = $45 * 4,000 = $180,000
Substituting the values into equation (1), we have:
Contribution margin ratio = ($240,000 - $180,000) / $240,000 = $60,000 / $240,000 = 0.25, 0r 25%
b. What is the unit contribution margin?
This can be calculated as follows:
Unit contribution margin = Selling price per unit - Variable cost per unit = $60 - $45 = $15 per unit
c. What is the income from operation?
This can be calculated as follows:
Income from operation = Total sales revenue - Total variable cost - Fixed costs .................. (2)
Where;
Total sales revenue = Selling price per unit * Unit sold = $60 * 4,000 = $240,000
Total variable cost = Variable cost per unit * Unit sold = $45 * 4,000 = $180,000
Fixed costs = $40,000
Substituting the values into equation (2), we have:
Income from operation = $240,000 - $180,000 - $40,000 = $20,000
