Weidner Company sells 22,000 units at $30 per unit. Variable costs are $24 per unit, and fixed costs are $40,000. Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) income from operations.
Answer:
a. 20% = ($30 – $24) ÷ $30, or ($660,000 – $528,000) ÷ $660,000
b. $6 per unit = $30 – $24
c. Sales……………………………………… $660,000 (22,000 units × $30 per unit)
Variable costs…………………………… 528,000 (22,000 units × $24 per unit)
Contribution margin…………………… $132,000 (22,000 units × $6 per unit)
Fixed costs……………………………… 40,000
Income from operations……………… $ 92,000
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