FlashCo. Manufacturing manufactures 256GB SD cards (memory cards for mobile phon

Question

FlashCo. Manufacturing manufactures 256GB SD cards (memory cards for mobile phones, digital cameras, and other devices). Price and cost data for a relevant range extending to 200,000 units per month are as follows (Cick the icon to view the data.) Read the equirements. Requirement 1. What is the company's contribution margin per unit? Contribution margin percentage? Total contribution margin? Begin by identifying the formula. Contribution margin per unit Data Table The contributio What is the company's contribution margin percentage? Begin by identifying the formula n margin per unit is S $ 25.00 Sales price per unit: (current mornthly sales volume is 100,000 units) Variable costs per unit: -Contribution margin percentage Round your answer to the nearest whole percent.) The contribution margin percentage is What is the company's total contribution margin? Begin by identifying the formula Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses 8.00 8.00 3.70 1.90 Monthly fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expenses $121,800 $167,100 Contribution margin The total contribution margin is $ [- ] Print Done

Explanation / Answer

Req 1: Contribution margin per unit: Selling Price per unit      - Variable cost per unit      = Contribution margin per unit 25 21.6 $ 3.40 per unit Contribution Margin percentage Contribution margin per unit / Selling price                       = Contribution margin Percentage 3.4 25 13.60% Total Contribution margin: Sales revenue     - Variable Cost                     = Total Contribution margin 2,500,000 2,160,000 340,000 Req 2: Operating income for 130,000 units Sales revenue (130,000@25) 3250000 Less: Variable cost (130000@21.60) 2808000 Contribution margin 442000 Less: Fixed cost 288900 Net Operatiing Income 153100 Req 3: Operating Income for $ 4500,000 sales. Sales Revenue 4,500,000 CM percentage 13.60% Contribution margin 612000 Less: Fixed cost 288900 Net operating income 323100 REq4: Break even point in units: (Fixed cost       + Net Operating income) / Contribution per unit      = Break even units 288900 0 3.4 84971 units Break even point in $ (Fixed cost       + Net Operating income) / Contribution margin %     = Break even in $ 288900 0 13.60% $2,124,265 Req 5: Traget profit of $260100 (Fixed cost       + Target profit ) / Contribution per unit      = Break even units 288900 260100 3.4 161471 units Req 7: Operating Leverage factor Contribution      / Net Operating income        = Operating leverage 340,000 51100 6.65 Req 9: Margin of safety Sales revenue     - Break even sales in $      = Margin of safety 2,500,000 2124265 375735 Margin of safety as percentage of sales Margin of safety in $   / sales revenue    = Margin of safety % 375735 2,500,000 15.03% Req 10. Weighted Contribution margin per unit 256 Gb 512 Gb Total Sales revenue per unit 25 50 Variable cost per unit 21.6 27 Contribution per unit 3.4 23 Sales mix 9 1 Contribution per sales mix 30.6 23 53.6 Weighted Average Contribution margin per unit 5.36 The new target sales in units is 102,426 units. The company need to sell 92183 units of 256 Gb and 10243 units of 512 GB The volume is lower than previously needed due to addition of new product giving higher CM percentage as compared to earlier product only.

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