Question

The following totals are used to create a CVP Income Statement for Frederick Company for FY2018: Frederick Company Selected Financial Figures For the Year Ended 12/31/18 Sales (100 units) $10,000 Variable Costs: Direct Labor $1,500 Direct Materials 1,400 Factory Overhead (variable) 2,000 Selling Expenses (variable) 600 Administrative Expenses (variable) 500 Fixed Costs: Factory Overhead (fixed) $900 Selling Expenses (fixed) 1,000 Administrative Expenses (fixed) 1,000 Frederick Company utilizes a JIT production system and there are no Raw Materials, Work-in-Process or Finished Goods inventories. Use this information to determine FY 2018 Contribution Margin Percentage. Enter percentage to one decimal place. (example enter 35.5% as 35.5)

Answer 1

• Contribution margin % = (Contribution margin/ Sales) x 100

Answer = 40.0 %

• Working

A	Sales	$                10,000
	Less: Variable Costs
	Direct Labor	$                   1,500
	Direct Materials	$                   1,400
	Factory Overheads	$                   2,000
	Selling Expenses	$                      600
	Administrative expenses	$                      500
B	Total variable cost	$                   6,000
C = A - B	Contribution margin	$                   4,000
D = (C/A) x 100	Contribution margin %	40.0% = Answer [4000/10000]x100