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Contribution Margin Harry Company sells 35,000 units at $26 per unit. Variable costs are $17.42 per unit,...

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Accounting

Contribution Margin

Harry Company sells 35,000 units at $26 per unit. Variable costsare $17.42 per unit, and fixed costs are $126,100.

Determine (a) the contribution margin ratio, (b) the unitcontribution margin, and (c) income from operations.

a. Contribution margin ratio (Enter as a wholenumber.)%
b. Unit contribution margin (Round to thenearest cent.)$per unit
c. Income from operations$

Answer & Explanation Solved by verified expert
3.7 Ratings (506 Votes)

contribution margin ratio

33%

Unit contribution margin

$8.58 per unit

Income from operations

$174,200

Working:

  • Contribution margin ratio=contribution margin/Sales

                                                      =(8.58/26)=33%

  • Contribution margin=Sales-Variable cost

                          =(26-17.42)=$8.58 per unit

  • Contribution margin at 36000 units=($8.58*35000)=$300,300

                                                      Less: Fixed cost=$(126,100)

                                             Income from operations=$174,200
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