Question

PB1.

Answer 1

Answer:

Contribution margin per unit = $85 per cubic yard

Contribution margin ratio = 56.67%

Explanation:

The computations are calculated below:

Contribution margin per unit = Selling price per cubic yard - variable cost  cubic yard

= $150 - $65

= $85 per cubic yard

Contribution margin ratio would be

= (Contribution margin per cubic yard) ÷ (Selling price per cubic yard) × 100

= ($85) ÷ ($150) × 100

= 56.67%

And, The statement of contribution margin income for the month of August is shown below:

Sales (240 cubic yards × $150)                          $36,000

Less: Variable cost (240 cubic yards × $65)    ($15,600)  

Contribution margin                                           $20,400

Less: Fixed expenses per month                     ($15,000)  

Net income                                                         $5,400