. Contribution margin ratio (Enter as a whole number.) fill in the blank 1 % b. Unit contribution margin (Round to the nearest cent.) $fill in the blank 2 per unit c. Income from operations $fill in the blank 3
Ferrante Company sells 15,000 units at $47 per unit. Variable costs are $31.96 per unit, and fixed costs are $76,700.
Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) income from operations.
| a. Contribution margin ratio (Enter as a whole number.) | fill in the blank 1 | % |
| b. Unit contribution margin (Round to the nearest cent.) | $fill in the blank 2 | per unit |
| c. Income from operations | $fill in the blank 3 |
Answer to the fallowing above three parts a)Contribution Margin Ratio: 32%
b)Unit Contribution Margin: 15.04
c)Income from Operations: $148,900
A) Computation of Contribution Margin Ratio:
Step 1: Compute the unit contribution margin .
| Selling Price per Unit | $47 |
| Less: Variable Cost per Unit | (31.96) |
| Unit Contribution Margin | $15.04 |
Step 2: Compute the contribution margin ratio.
Contribution Margin / Selling Price per Unit = Contribution Margin Ratio
$15.04 / $47 = 0.32 or 32%
B) Unit Contribution Margin:
Selling Price per Unit - Variable Costs per Unit = Unit Contribution Margin
| Selling Price per Unit | $47 |
| Less: Variable Cost per Unit | (31.96) |
| Unit Contribution Margin | $15.04 |
C) Income from Operations:
| Contribution Margin ($15.04 x 15,000 units) | $225,600 |
| Less: Fixed Costs | (76,700) |
| Income from Operations | $148,900 |
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