what is the contribution margin per unit | M Your inquiry on 7520 Merce 7520 Mer

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what is the contribution margin per unit | M Your inquiry on 7520 Merce 7520 Mercedes way. Rohne-Ch 5 Foun () 990 Camino Coronado For | eztomheducation.com hmtpx?--08829068776212151.1 520063124793 Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales Veriable expenses $ 21,800 12,600 Contribution margin Fixed expenses 9,200 7.452 Net operating income $ 1,748 value 10.00 points Required: 1. What is the contribution margin per unit? (Round your answer to 2 decimal places.) Contribution margin per unit 2 decimal places required. O Type here to search

Explanation / Answer

Solution 1:

Contribution margin per unit = Total contribution margin / Number of unit = $9,200/1000 = $9.20 per unit

Solution 2:

Contribution margin ratio = Contribution / Sales = $9,200 / $21,800 = 42.20%

Solution 3:

Variable expenses ratio = Variable Expenses / Sales = $12,600 / $21,800 = 57.80%

Solution 4:

If sales increased to 1001 units then increased in sales units = 1001 - 1000 = 1 unit

Therefore net operating income will increased by = Increase in number of units * contribution margin per unit = 1*$9.20 = $9.20

Solution 5:

If sales decline to 900 units then revised

Contribution = 900 * $9.20 = $8,280

Revised net operating income = $8,280 - $7,452 = $828

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