Question

Exercise 173 Determine the missing amounts. Unit Selling Price Unit Variable Costs Unit Contribution Margin Contribution Margin Ratio 1. $300 $210 % 2. $600 $210 % 3 . $360 30 % Click If you would like to Show Work for this question: Open Show Work

Answer 1

Solution:               

1.

The formula for calculating contribution margin is

Unit Contribution margin = Unit Selling price – Unit Variable costs            

As per the information given in the question we have

Unit Selling price = $ 300 ; Unit Variable costs = $ 210

Thus the Unit Contribution margin = $ 300 - $ 210 = $ 90 ;

The formula for calculating the contribution margin ratio is

= Unit Contribution margin / Unit selling price

Applying the above information in the contribution margin ratio we have

= $ 90 / $ 300

= 0.30 = 30 %

Thus the contribution margin ratio = 30 %

2.

The formula for calculating contribution margin is

Unit Contribution margin = Unit Selling price – Unit Variable costs            

As per the information given in the question we have

Unit Selling price = $ 600 ; Unit Contribution margin = $ 210   ;   Unit Variable costs = To find   ;

Applying the available information in the formula we have

$ 210 = $ 600 - Unit Variable costs

$ 210 + Unit Variable costs = $ 600

Unit Variable costs = $ 600 - $ 210 = $ 390

The formula for calculating the contribution margin ratio is

= Unit contribution margin / Unit selling price

Applying the above information in the contribution margin ratio we have

= $ 210 / $ 600

= 0.35 = 35 %

Thus the contribution margin ratio = 35 %

3.

The formula for calculating the contribution margin ratio is

Contribution margin ratio = Unit Contribution margin / Unit selling price

As per the information given in the question we have

Unit contribution margin = $ 360   ; Contribution margin ratio = 30 % = 0.30

Applying the above information in the contribution margin ratio we have

0.30 = $ 360 / Unit selling price

Unit selling price * 0.30 = $ 360

Unit selling price = $ 360 / 0.30

Unit selling price = $ 1200

The formula for calculating contribution margin is

Unit Contribution margin = Unit Selling price – Unit Variable costs            

As per the information available we have

Unit Selling price = $ 1200 ; Unit Contribution margin = $ 360   ;   Unit Variable costs = To find   ;

Applying the available information in the formula we have

$ 360 = $ 1200 - Unit Variable costs

Unit Variable costs = $ 1200 - $ 360

Unit Variable costs = $ 840