A new customer, age 45, has been terminated from his assembly-line job of the past 20 years at an automotive parts supplier. Dur
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A firm expects to sell 25,500 units of its product at $11. 50 per unit and to incur variable costs per unit of $6. 50. total fixed costs are $75,000. the total contribution margin is $127500.
The contribution margin is computed as the promoting rate per unit, minus the variable fee in keeping with the unit. additionally referred to as greenback contribution in keeping with the unit, the measure shows how a specific product contributes to the general profit of the organization.
The closer a contribution margin percentage, or ratio, is to 100%, the better. The better the ratio, the more money is available to cowl the commercial enterprise's overhead expenses or fixed prices. However, it is more likely that the contribution margin ratio is well below one hundred%, and possibly beneath 50%.
Contribution margin, or greenback contribution per unit, is the selling rate per unit minus the variable price in step with the unit. "Contribution" represents the part of sales revenue that is not consumed through variable expenses and so contributes to the coverage of constant fees.
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Answer: <u><em>Depreciation for the first year = 17825</em></u>
Explanation:
Given:
Machine purchased for $125,000
Salvage value of $10,000
Output = 100,000
First year of operation, Output = 15500
First, we'll evaluate depreciation per unit over the entire life of the machine:
i.e.
Depreciation per unit =
<em>Depreciation per unit = 1.15</em>
Now, we'll compute the depreciation for the first year:
Depreciation for the first year = Depreciation per unit × Output (first year)
Depreciation for the first year = 1.15 × 15500
<u><em>Depreciation for the first year = 17825</em></u>