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    Unit Contribution Margin for a tile manufacturer

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    A tile manufacturer has supplied the following data:

    Boxes of tile produced and sold 625,000
    Sales revenue $2,975,000
    Variable manufacturing expense $1,720,000
    Fixed manufacturing expense $790,000
    Variable selling and admin expense $152,000
    Fixed selling and admin expense $133,000
    Net operating income $180,000

    a. Calculate the company's unit contribution margin
    b. Calculate the company's unit contribution ratio
    c. If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the company's net operating income be?

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    Solution Preview

    a. Calculate the company's unit contribution margin
    Contribution margin = Sales - Variable expenses
    Contribution margin = $2,975,000- (1720,000+152,000) = $1,103,000
    Unit ...

    Solution Summary

    This solution details how to compute unit production margin and contribution ratio.