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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company sells small motors as a component part to automobiles. The Model 101 motor sells for $800 and has per-unit variable costs of $320 associated with its production. The company has fixed expenses of $100,000 per month. In August, the company sold 415 of the Model 101 motors. A. Calculate the contribution margin per unit for the Model 101. Contribution margin $ per unit B. Calculate the contribution margin ratio of the Model 101. Contribution margin ratio % C. Prepare a contribution margin income statement for the month of August. Use a minus sign for a net loss if present. Income Statement Gross Loss Gross Profit Net Income (Loss) Purchases Sales
Transcribed Image Text:A company sells small motors as a component part to automobiles. The Model 101 motor sells for $800 and has per-unit variable costs of $320 associated with its production. The company has fixed expenses of $100,000 per month. In August, the company sold 415 of the Model 101 motors. A. Calculate the contribution margin per unit for the Model 101. Contribution margin $ per unit B. Calculate the contribution margin ratio of the Model 101. Contribution margin ratio % C. Prepare a contribution margin income statement for the month of August. Use a minus sign for a net loss if present. Income Statement Gross Loss Gross Profit Net Income (Loss) Purchases Sales
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