High-Low Method, Contribution Margin, CM Ratio
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1.)The manufacturing cost of Mocha Industries for three months of the year are provided below:
Total Cost Production
April $63,100 1,200 units
May 80,920 1800
June 100,300 2400
Using high low method determine the (a) variable cost per unit, and (b) the total fixed costs.
2.) Carmelita Company sells 40,000 units at $18 per unit. Variable costs are $10 per unit, and fixed costs are $62,000. Determine the (a) unit contribution margin,(b) contribution margin ratio, and (c) income from operations.
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Solution Summary
This solution illustrates how to determine a company's fixed and variable costs using the High-low method, and how to compute the contribution margin and contribution margin ratio.
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