Q25E - Horngren'S Financial And Managerial Accounting

Question

Question: Computing contribution margin in total, per unit, and as a ratio

Complete the table below for contribution margin per unit, total contribution margin, and contribution margin ratio: 

                                                                                A                  B                     C Number of units                                                                                                     1,720 units     14,920 units    4,620 units 

Sales price per unit                                   \( 1,800             \) 4,500            $ 5,550 

Variable costs per unit                                  720                  3,600                1,665 

Calculate:                                                                                                                       

Contribution margin per unit                                                                                             

Total contribution margin                                                                                

Contribution margin ratio  

Step-by-Step Solution

Answer

Answer

 

1.  $\mathbf{A}\mathbf{=}\mathbf{1}\mathbf{,}\mathbf{080}\mathbf{,}\mathbf{B}\mathbf{=}\mathbf{\$}\mathbf{900}\mathbf{,}\mathbf{C}\mathbf{=}\mathbf{\$}\mathbf{3}\mathbf{,}\mathbf{885}$
2.  $\mathbf{A}\mathbf{=}\mathbf{\$}\mathbf{1}\mathbf{,}\mathbf{857}\mathbf{,}\mathbf{600}\mathbf{,}\mathbf{B}\mathbf{=}\mathbf{\$}\mathbf{13}\mathbf{,}\mathbf{428}\mathbf{,}\mathbf{000}\mathbf{,}\mathbf{C}\mathbf{=}\mathbf{\$}\mathbf{17}\mathbf{,}\mathbf{948}\mathbf{,}\mathbf{700}$
3.  $\mathbf{A}\mathbf{=}\mathbf{60}\mathbf{\%}\mathbf{,}\mathbf{B}\mathbf{=}\mathbf{12}\mathbf{\%}\mathbf{,}\mathbf{C}\mathbf{=}\mathbf{70}\mathbf{\%}$

 

Step 1: Calculation of contribution margin per unit

Sales per unit	$1800	$4500	$5,550
Less: Variable cost	$720	$3600	$1,665
Contribution	$180	$900	$3,885

Step 2: Calculation of total contribution margin

Number of units	1,720	14,920	4,620
Contribution	$1,080	$900	$3,885
Total contribution	$1,857,600	$13,428,000	$17,948,700

Step 3: Calculation of contribution margin ratio

Sales per unit	$1,800	$4800	$5,550
Contribution	$1,080	$900	$3,885
Contribution margin ratio	60%	12%	70%