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19) Managerial Financial Accounting Assignments AE4-13 Solution

19) Managerial Financial Accounting Assignments AE4-13 Solution

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AE4-13

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Contribution Margin [LO 3] Rhetorix, Inc. produces stereo speakers. The selling price per pair of speakers is \$700. The variable cost of production is \$210 and the fixed cost per month is \$66,700. Calculate the contribution margin associated with a pair of speakers. \$ 490 AE4-13 The contribution margin is \$490 (i.e., \$700 - \$210).
In August, the company sold 11 more pairs of speakers than planned. What is the expected effect on profit of selling the additional speakers? \$ 5,390 AE4-13 The effect on profit of selling 11 more pairs of speakers is

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Unformatted text preview: \$5,390 (i.e., \$490 × 11). Calculate the contribution margin ratio for Rhetorix associated with a pair of speakers. (Enter answer to 2 decimal places, e.g. 0.25.) 0.70 AE4-13 The contribution margin ratio is \$490 ÷ \$700 = 0.70 In October, the company had sales that were \$9,400 higher than planned. What is the expected effect on profit related to the additional sales? \$ 6,580 Click here if you would like to Show Work for this question AE4-13 \$9,400 × 0.70 = \$6,580...
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