**Kingston Company's Cost Analysis**Kingston Company sells its product for $300 per unit. The company's accountant provided the following cost information:- **Manufacturing Costs**: $20,300 + 46% of sales- **Selling Costs**: $13,100 + 2% of sales- **Administrative Costs**: $25,400 + 8% of salesThe question posed: What is Kingston Company's contribution margin ratio?This analysis highlights the breakdown of costs associated with producing and selling its product. The contribution margin ratio will help determine the proportion of sales revenue that exceeds total variable costs, enabling insight into the company's profitability.

We have, Sale price = $300 per unit Manufacturing costs = $20,300 + 46% of sales Selling costs =…

Answered: What is Kingston Company's contribution…

Business

Accounting

What is Kingston Company's contribution margin ratio?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: What is the Importance of the Profit Ratio?

A: Profit ratio: Profit ratio is utilized to assess the corporation's capacity to make revenue as…

Q: How does the lower of cost or market relate to profit margins?

A: Answer: The lower cost or market implies that, depending on how historical costs and market costs…

Q: Which of statements about the contribution income statement is correct? Group of answer choices

A: A contribution income statement is defined as the statement in which all the variable costs and all…

Q: What is Re-order quantity? What is Re-order level? What is Maximum stocklevel? With respect to…

A: Inventory management consist of various levels namely re-order level, re-order quantity, maximum and…

Q: What is the relationship between total carrying cost and totalordering cost at the EOQ?

A: It indicates an inverse relationship between the cost of ordering and the cost of holding at…

Q: What is operating profitability ratio (OP)?

A: These ratios evaluate a firm’s ability to earn profits. They help the stakeholders of the company to…

Q: What is the company’s contribution margin (CM) ratio?

A: Contribution margin is the amount of sales revenue left after charging variable expenses.…

Q: What is the lnventory·turnover ratio?

A: Inventory turnover ratio: Inventory turnover ratio indicates how many times a corporation has sold…

Q: How is Gross Margin % calculated?

Q: Which components correspond to the following terms? Match each item to a choice: Choices: Selling…

A: Insurance is defined as an arrangement for securing the life of an individual or to compensate the…

Q: What is the meaning of contribution margin ratio? How is this ratio useful in planning…

Q: What's the difference between the profit margin and gross margin ratio?

A: Ratio is the arithmetic relationship between two figures. Accounting ratios shows the…

Q: Why is the basic earning power ratio useful?

A: Basic earning power ratio shows the relationship between earnings before interest and taxes and…

Q: Define ( a ) contribution margin, ( b ) contribution marginratio, and ( c ) average contribution…

A: Contribution margin helps management to determine the amount of sales revenue left after considering…

Q: Which one of the following is defined, at any given sales volume, as the ratio of the total…

A: Contribution margin is Sales less variable expenses at any given volume. Operating profit is…

Q: What is net operating margin ?

A: operating profit is the companies earnings after deducting operating expenses. operating profit =…

Q: role of the cost and its impact on profitability?

A: Costing is an important process that businesses use to determine the cost of producing goods and…

Q: Describe the Unit-Profit or Unit-Cost Calculation?

A: A unit cost is a net expense a firm has incurred to manufacture, store, and sell one unit of a…

Q: How to calculate gross margin and gross sales

A: Sales means the amount recorded in books as revenue earned by selling the goods or services. Account…

Q: How is contribution margin calculated? What about contribution margin ratio? Aren’t they the same…

A: Subtracting the selling price per unit from the variable cost per unit yields the contribution…

Q: 7. Which of the following is a correct formula to calculate contribution margin ratio (CM ratio)?…

A: The break even sales are the sales where business earns no profit no loss during the period.

Q: he Thotho income statement variable costing

A: In variable costing income statement, the sale revenue is reduced by all the variable cost to arrive…

Q: What are “initial direct costs” and how are they accountedfor?

Q: Define Accounts payable and what are its representative cost driver?

A: Accounts payable: Accounts payable is the obligation of the company to make payment (within period…

Q: What is a company’s cost structure? How can cost structure affect a company’s profits?

A: Company's cost structure expresses the proportion of fixed costs to variable cost. Cost structure…

Q: How is the cost per equivalent unit of production calculated?

Q: How does a contribution margin income statement differ from a traditional income statement?

A: Income statement: The financial statement which reports revenues and expenses from business…

Question

**Kingston Company's Cost Analysis**

Kingston Company sells its product for $300 per unit. The company's accountant provided the following cost information:

- **Manufacturing Costs**: $20,300 + 46% of sales
- **Selling Costs**: $13,100 + 2% of sales
- **Administrative Costs**: $25,400 + 8% of sales

The question posed: What is Kingston Company's contribution margin ratio?

This analysis highlights the breakdown of costs associated with producing and selling its product. The contribution margin ratio will help determine the proportion of sales revenue that exceeds total variable costs, enabling insight into the company's profitability.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Determining Variable costs

VIEW

Calculation of Contribution margin ratio

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

How can we apply Annual-Worth Analysis for the calculation of Unit-Profit or Unit-Cost Calculation?
Companies benefit greatly from the use of a standard cost system, and the statement?
How variable and fixed expenses determined and analyzed?
How can the expected sales for a product group be converted into expected unit sales ?
Why might a company price goods below costs?
Discuss the components of the Contribution Margin Income Statement, how does management use this in the decision making process?
what are the advantages of calculating a supplier performance index?
1. Now change all of the dollar amounts in the data area of your worksheet so that it looks like this: 1 2 3 Data 4 Sales Variable costs: 5 67 00 8 A Chapter 1: Applying Excel 9 10 11 Cost of goods sold Variable selling Variable administrative Fixed costs: Fixed selling Fixed administrative $ $ $ $ $ $ B 32,000 16,000 1,600 1,400 2,500 1,500
How change in activity(sale) affect the contribution margin and net operating income?
The formula for Contribution is Select one: a. Fixed cost + loss b. Sales - Variable cost c. Fixed cost - Profit d. Sales + Variable cost
What are “initial direct costs” and how are they accounted for by lessees and lessors?