A cement manufacturer has supplied the following data:
Tons of cement produced and sold........................ 680,000
Sales revenue......................................................... $2,788,000
Variable manufacturing expense........................... $1,156,000
Fixed manufacturing expense................................ $760,000
Variable selling and administrative expense......... $272,000
Fixed selling and administrative expense.............. $294,000
Net operating income............................................. $306,000
1. What is the company's unit contribution margin? A) $0.45 B) $2.10 C) $2.00 D) $4.10
2. The company's contribution margin ratio is closest to: A) 39.0% B) 51.2% C) 11.0% D) 48.8%
3. If the company increases its unit sales volume by 4% without increasing its fixed expenses, then total net operating income should be closest to: A) $12,240 B) $318,240 C) $360,400 D) $311,973
SOLUTION PREVIEW
Contribution margin = Sales -
Variable expenses Contribution margin
=
$2,788,000 - ($1,156,000 + $272,000)
Contribution margin =
$1,360,000
File name: cement-manufacturer.doc File type: application/msword Price: 4
