Weidner Company sells 22,000 units at $30 per unit. Variable costs are $24 per unit, and fixed costs are $40,000

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