The following is Arka Corporation\'s contribution format income statement for la

Question

The following is Arka Corporation's contribution format income statement for last month Total Per Unit $1,200,000 $340,000 $350,000 Direct labor (variable).... Manufacturing overhead: Variable Fixed.... $110,000 $155,600 Selling & administrative: Variable Fixed 140,000 $96,756 .... The company has no beginning or ending inventories, and produced and sold 25,000 units during the month. Required: Compute the following items - show your calculations: a. Unit contribution margin b. Contribution margin ratio (round to three significant digits.)

Explanation / Answer

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Contribution per unit Sales - $ 1,200,000 /25,000 units 48 Less: Variable cost 8 Direct Material - $ 340,000 / 25,000 units 13.6 Direct Labor - $ 350,000 / 25,000 units 14 Variable manufacturing overhead - $ 110,000 / 25,000 units 4.4 Variable selling & administrative expense 5.6 Total Variable cost 45.6 Contribution 2.4

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