Question

Keebee, Inc. sold 1,000 units of product for $200 each in January and incurred total variable costs of $80,000 and total fixed cost of $50,000.

Compute the following:

1. Total contribution margin

2. Contribution margin per unit

3. Contribution margin ratio

4. Net operating income

Answer 1

1. Total contribution margin	$                 1,20,000
2. Contribution margin per unit	120 per unit
3. Contribution margin ratio	60%
4. Net operating income	$                     70,000
Working notes
4 .Net operatizing statement
Sales(1000*200)	$                 2,00,000
Less: Variable cost	$                     80,000
Contribution	$                 1,20,000
Less:Fixed Cost	$                     50,000
Net operating income	$                     70,000
1. Total contribution margin
Contibution margin = Sales - Variable cost
200000 - 80000	$                 1,20,000
2. Contribution margin per unit
(Toatal sales-Variable cost)/Number of units
(200000-80000)/1000	$                           120
3. Contribution margin ratio
(Sales -Variable cost)/ Sales
(200000-80000)/200000	60%
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