Answer:
a. Total contribution margin is $140,420.00
b. Unit contribution margin is $11.80
c. Contribution margin ratio is 0.59.
Explanation:
a. What is the total contribution margin? (Round your intermediate calculations to 2 decimal places.)
Sales revenue = 11,900 × $20 = $238,000
Total variable cost = (11,900 × $3) + (11,900 × $2.6) + (11,900 × $2.6) = $97,580
Total contribution margin = $238,000 - $97,580 = $140,420.00
b. What is the unit contribution margin?
Unit contribution margin = Total contribution margin ÷ Units sold = $140,420.00 ÷ 11,900 = $11.80
c. What is the contribution margin ratio? (Round your intermediate calculations and final answer to 2 decimal places.)
Contribution margin ratio = Unit contribution margin ÷ Unit selling price = $11.80/20.00 = 0.59.
