Calculate the contribution margin per unit and the total contribution margin

Gooey Relish has the capacity to produce either 54,000 corncob pipes or 25,200 cornhusk dolls per year. The pipes cost $3.60 each to produce and sell for $9.00 each. The dolls sell for $12.00 each and cost $4.80 to produce.

Required
Assuming that gooey relish can sell all it produces of either product, should it produce the corncob pipes or cornhusk dolls? Sho computations to support your answer.

Solutions

Expert Solution

sales price minus Variable costs= contribution margin

pipes: 9.00 - 3.60 = 5.40

dolls: 12.00 - 4.80 = 7.20

CM x Units produced and sold = Total CM

Pipes: 5.40 x 54,000 = 291,600

dolls: 7.20 x 25,200 = 181,440

It should produce the corncob pipes.

Christopher Mann answered 2 years ago

Next > < Previous

Related Solutions

Calculate the contribution margin per unit and the total contribution margin

Sweet Taste has the capacity to produce either 52,000 corncob pipes or 30,000 cornhusk dolls per year. The pipes cost $6.75 each to produce and sell for $15.00 each. The dolls sell for $17.50 each and cost $7.75 to produce.RequiredCalculate the contribution margin per unit and the total contribution margin for Pipes and Dolls. Assuming that Sweet Taste can sell all it produces of either product, should it produce the corncob pipes or the cornhusk dolls? (Round "Contribution margin per unit"...

If total fixed costs is $100,000, contribution per unit is $25 and the contribution margin ratio...

If total fixed costs is $100,000, contribution per unit is $25 and the contribution margin ratio is 40% and the company desired target profit of $25,000, what are the values of the followings (see page 97): a) Break-Even-Point in unit = _________________? b) Break-Even-Point in sales dollars________________________?

How does the total contribution margin (unit contribution margin x total number of units sold) differ...

How does the total contribution margin (unit contribution margin x total number of units sold) differ from the gross margin often seen on companies' financial statements?

In 250 words explain What is contribution margin per unit? What is contribution margin ratio?

1. Leeks Company's product has a contribution margin per unit of $12.65 and a contribution margin...

1. Leeks Company's product has a contribution margin per unit of $12.65 and a contribution margin ratio of 23.0%. What is the selling price of the product? 2 Barclay Bikes manufactures and sells three distinct styles of bicycles: the Youth model sells for $500 and has a unit contribution margin of $155; the Adult model sells for $950 and has a unit contribution margin of $500; and the Recreational model sells for $1,300 and has a unit contribution margin of...

A total of 30,000 units were sold last year. The contribution margin per unit was $2...

A total of 30,000 units were sold last year. The contribution margin per unit was $2 and fixed expenses totaled $20,000 for the year. This year fixed expenses are expected to increase to $26,000, but the contribution margin per unit will remain unchanged at $2. How many units must be sold this year to earn the same profit as earned last year?

Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the...

Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the following independent situations, calculate the amount(s) required. Required: 1. At the break-even point, Jefferson Company sells 85,000 units and has fixed cost of $348,600. The variable cost per unit is $0.35. What price does Jefferson charge per unit? Note: Round to the nearest cent. $ 2. Sooner Industries charges a price of $127 and has fixed cost of $360,500. Next year, Sooner expects to...

Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the...

Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the following independent situations, calculate the amount(s) required. Required: 1. At the break-even point, Jefferson Company sells 95,000 units and has fixed cost of $349,700. The variable cost per unit is $0.15. What price does Jefferson charge per unit? Note: Round to the nearest cent. $ 2. Sooner Industries charges a price of $129 and has fixed cost of $421,000. Next year, Sooner expects to...

Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the...

Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the following independent situations, calculate the amount(s) required. Required: 1. At the break-even point, Jefferson Company sells 85,000 units and has fixed cost of $351,900. The variable cost per unit is $0.30. What price does Jefferson charge per unit? Note: Round to the nearest cent. $ 2. Sooner Industries charges a price of $136 and has fixed cost of $391,500. Next year, Sooner expects to...

Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the...

Price, Variable Cost per Unit, Contribution Margin, Contribution Margin Ratio, Fixed Expense For each of the following independent situations, calculate the amount(s) required. Required: 1. At the break-even point, Jefferson Company sells 85,000 units and has fixed cost of $346,500. The variable cost per unit is $0.10. What price does Jefferson charge per unit? Note: Round to the nearest cent. $ 2. Sooner Industries charges a price of $98 and has fixed cost of $476,500. Next year, Sooner expects to...

Subjects