Question

Chilton, Inc. sold 11,900 units last year for $20 each. Variable costs per unit were $3.00 for direct materials, $2.60 for direct labor, and $2.60 for variable overhead. Fixed costs were $61,200 in manufacturing overhead and $41,800 in nonmanufacturing costs.a. What is the total contribution margin? (Round your intermediate calculations to 2 decimal places.)b. What is the unit contribution margin? (Round your answer to 2 decimal places.)c. What is the contribution margin ratio? (Round your intermediate calculations and final answer to 2 decimal places.)

Answer 1

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.