Question

Frazier Company sells women's ski jackets. The average sales price is $272 and the variable cost per jacket is $122. Fixed Costs are $1,247,000. I razier sells 14,700 jackets, the contribution margin will be:a.$958,000 b.$2,205,000 c.$2.751400 d.$835,400

Answer 1

Answer:

b. $2,205,000

Explanation:

We know,

Contribution Margin = Sales (Revenues) - Variable Cost (expense)

Contribution margin is the difference between sales and variable cost.

Given,

Sales per unit = $272

Variable cost per unit = $122

Sales volume (Number of Ski Jackets) = 14,700 jackets

Now, we use contribution margin format income statement to determine the contribution margin for 14,700 jackets.

Sales ($272 × 14,700 jackets)                                             $3,998,400

Less: Variable expense ($122 × 14,700 jackets)                $(1,793,400)

Contribution Margin [($272 - 122) × 14,700 jackets]  = $2,205,000

Therefore, option B is the answer.