Question

Riker Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $149 per unit. Sales volume (units) 14,800 16,310 Cost of sales $1,272,800 $1,402,660 Selling and administrative costs $671,000 $698,180 Question: What will estimated contribution margin be if 15,800 units are sold?

Answer 1

Riker Corporation's Contribution Margin at 15,800 level of activity is $995,400 ($63 per unit) and Contribution Margin (%) is 42%

Step-by-step explanation:

Contribution at Sales Volume of 15,800:

Sales Revenue (15,800 × $149) $2,354,200

Cost of Sales (Working 1) $(1,358,800)

Contribution Margin $995,400

Contribution Margin (per unit) $63

Contribution Margin (%) 42%

Working 1

Sales Volume (Units) 14,800 16,310

Cost of Sales ($) $1,272,800 $1,402,660

Cost of Sales per unit $86 $86

(Cost of Sales ÷ Sales Volume)

*Figures in brackets represent negative figures