# Course Hero - \$2,842,000 Contribution margin ratio =...

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A tile manufacturer has supplied the following data: Boxes of tile produced and sold 580,000 Sales revenue \$2,842,000 Variable manufacturing expense \$1,653,000 Fixed manufacturing expense \$784,000 Variable selling and admin expense \$145,000 Fixed selling and admin expense \$128,000 Net operating income \$132,000 Required: a. Calculate the company's unit contribution margin Contribution margin = Sales - Variable expenses Contribution margin = \$2,842,000 - (\$1,653,000 + \$145,000) Contribution margin = \$1,044,000 Unit contribution margin = Contribution margin Boxes of tiles Unit contribution margin = \$1,044,000 580,000 Unit contribution margin = \$1.8 b. Calculate the company's unit contribution ratio Contribution margin ratio = Contribution margin Sales Contribution margin ratio = \$1,044,000

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Unformatted text preview: \$2,842,000 Contribution margin ratio = 36.74% (rounded) c. If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the company's net operating income be? Contribution margin = Sales - Variable expenses Contribution margin = \$2,132,000 - (\$650,000 + \$260,000) Contribution margin = \$1,222,000 Unit contribution margin = Contribution margin Boxes of tiles Unit contribution margin = \$1,222,000 520,000 Unit contribution margin = \$2.35 Increase in sales units = 580,000 x 5% = 29,000 units Increase in net operating income = Unit contribution margin x Increase in sales units = \$1.8 x 29,000 = \$52,200 New net operating income = Current net operating income + Increase = \$132,000 + \$52,200 = \$184,200...
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Course Hero - \$2,842,000 Contribution margin ratio =...

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