Contribution Margin Ferrante Company sells 24,000 units at $38 per unit. Variable costs are $32.30 per unit, and fixed costs are $71,100. 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.) b. Unit contribution margin (Round to the nearest cent.) c. Income from operations % per unit
Contribution Margin Ferrante Company sells 24,000 units at $38 per unit. Variable costs are $32.30 per unit, and fixed costs are $71,100. 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.) b. Unit contribution margin (Round to the nearest cent.) c. Income from operations % per unit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Step 1: Explaining Cost volume profit analysis
Cost volume profit analysis is the technique used by management for decision making. The methods include the break-even point, target profit, contribution margin, margin of safety, etc. The contribution margin is the excess value of revenue over the fixed cost.
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