Concept explainers
A company manufactures and sells blades that are used in riding lawnmowers. The 18-inch blade sells for $15 and has per-unit variable costs of $4 associated with its production. The company has fixed expenses of $85,000 per month. In January, the company sold 12,000 of the 18-inch blades.
A. Calculate the contribution margin per unit for the 18-inch blade.
B. Calculate the contribution margin ratio of the 18-inch blade.
C. Prepare a contribution margin income statement for the month of January.
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