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Question: Computing contribution margin in total, per unit, and as a ratio

Complete the table below for contribution margin per unit, total contribution margin, and contribution margin ratio:

A B C Number of units 1,720 units 14,920 units 4,620 units

Sales price per unit \( 1,800 \) 4,500 $ 5,550

Variable costs per unit 720 3,600 1,665

Calculate:                  

Contribution margin per unit                      

Total contribution margin                        

Contribution margin ratio

Short Answer

Expert verified

Answer

  1. A=1,080,B=$900,C=$3,885
  2. A=$1,857,600,B=$13,428,000,C=$17,948,700
  3. A=60%,B=12%,C=70%

Step by step solution

01

Calculation of contribution margin per unit

Sales per unit

$1800

$4500

$5,550

Less: Variable cost

$720

$3600

$1,665

Contribution

$180

$900

$3,885

02

Calculation of total contribution margin 

Number of units

1,720

14,920

4,620

Contribution

$1,080

$900

$3,885

Total contribution

$1,857,600

$13,428,000

$17,948,700

03

Calculation of contribution margin ratio

Sales per unit

$1,800

$4800

$5,550

Contribution

$1,080

$900

$3,885

Contribution margin ratio

60%

12%

70%

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The contribution margin income statement of Sugar Lips Donuts for August 2018 follows:

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Requirements

1. Calculate the weighted-average contribution margin.

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