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