ACC 406 Lecture Notes - Lecture 3: Contribution Margin, Fixed Cost, Variable Cost
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Variable Costs, Contribution Margin, Contribution Margin Ratio
Super-Tees Company plans to sell 12,000 T-shirts at $16 each in the coming year. Product costs include:
Direct materials per T-shirt | $5.75 |
Direct labor per T-shirt | $1.25 |
Variable overhead per T-shirt | $0.60 |
Total fixed factory overhead | $43,000 |
Variable selling expense is the redemption of a coupon, which averages $0.80 per T-shirt; fixed selling and administrative expenses total $19,000.
Required:
1. Calculate the following values:
Round dollar amounts to the nearest cent and round ratio values to three decimal places.
a. Variable product cost per unit | $ |
b. Total variable cost per unit | $ |
c. Contribution margin per unit | $ |
d. Contribution margin ratio | |
e. Total fixed expense for the year | $ |
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2. Prepare a contribution-margin-based income statement for Super-Tees Company for the coming year. If required, round your per unit answers to the nearest cent.
Super-Tees Company | ||
Contribution-Margin-Based Operating Income Statement | ||
For the Coming Year | ||
Total | Per Unit | |
< >SalesTotal contribution marginTotal fixed expenseTotal variable expense | $ | $ |
< >SalesTotal contribution marginTotal fixed expenseTotal variable expense | ||
< >SalesTotal contribution marginTotal fixed expenseTotal variable expense | $ | $ |
< >SalesTotal contribution marginTotal fixed expenseTotal variable expense | ||
< >Operating incomeOperating lossSalesTotal contribution margin | $ |
Feedback
3. What if the per unit selling expense increased from $0.80 to $1.75? Calculate new values for the following:
Round dollar amounts to the nearest cent and round ratio values to four decimal places:
a. Variable product cost per unit | $ |
b. Total variable cost per unit | $ |
c. Contribution margin per unit | $ |
d. Contribution margin ratio | |
e. Total fixed expense for the year | $ |
Presidio, Inc. produces one model of mountain bike. Partialinformation for the company follows:
Required: 1. Complete Presidioâs cost data table. (Round yourCost per Unit answers to 2 decimal places.)
Bikes produced and sold | 410 Units | 770 Units | 1924 Units |
Total Costs | |||
Variable costs | $106,600 | ||
Fixed costs | |||
Total Costs | |||
Cost per unit | |||
Variable cost per unit | |||
Fixed cost per unit | |||
Total Cost per unit | $532 |
2. Calculate Presidioâs contribution margin ratio and its totalcontribution margin at each sales level indicated in the cost datatable assuming the company sells each bike for $610. (Round yourMargin Ratio percentage answers to 2 decimal places (i.e. .1234should be entered as 12.34%.))
410 units | 770 Units | 1924 Units | ||||
Total Contribution Margin | ||||||
Contribution Margin Ratio | % | % | % |
3. Calculate net operating income (loss) at each of the saleslevels assuming a sales price of $610. (Round your answers to thenearest whole dollar amount.)
410 Units | 770 Units | 1924 Units | |
Net Operating Income (Loss) |