Question

Bluegill Company sells 7,200 units at $260 per unit. Fixed costs are $93,600 and income from operations is $842,400. Determine the following: Round the contribution margin ratio to two decimal places. a. Variable cost per unit $fill in the blank 1 b. Unit contribution margin $fill in the blank 2 per unit c. Contribution margin ratio fill in the blank 3 %

Answer 1

Variable cost per unit = $130

Contribution margin per unit = $130

Contribution margin ratio = 50%

Step-by-step explanation:

According to the scenario, computation of the given data are as follows,

Contribution margin per unit = (Fixed cost + Operations income) ÷ Total units

= ($93,600 + $842,400) ÷ 7,200

= $936,000 ÷ 7,200

= $130

Variable cost per unit = Sale price per unit - Contribution margin per unit

= $260 - $130

= $130

Contribution margin ratio = Contribution margin per unit ÷ Sale price per unit

= 130 ÷ 260

= 50%