13 Assume sales are $750,000, variable costs are 70% of sales, and income from o

Question

13

Assume sales are $750,000, variable costs are 70% of sales, and income from operations is $100,000. What is the contribution margin ratio and fixed cost, respectively?

14

The following costs were incurred in August:

Direct Materials                                             $25,000

Direct Labor                                                 $20,000

Manufacturing (Factory) Overhead                $25,000

Selling and Administrative Expenses    $40,000

(1) What is the amount of the prime costs?

(2) What is the amount of the period costs?

(3) What is the amount of the conversion costs?

(4) What is the amount of the product costs?

15

If Ragged Edge Arts sells quilts and paintings, and it has estimated selling 50 quilts at $250 each and 42 paintings at $500 each, what are the estimated sales for next year?

Explanation / Answer

13.

Sales $   750,000 Less: Variable cost ($750,000*70%) $   525,000 Contribution margin $   225,000 Contribution margin ratio ($225,000/$750,000) 30% Contribution margin $   225,000 Less: Income from operations $ (100,000) Fixed costs $   125,000

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