Question
In: Accounting
Company XYZ is a merchandising business. The company is specialized in selling a specific brand of...
Company XYZ is a merchandising business. The company
is specialized in selling a specific brand of smartphones.
The
purchase cost per unit was OMR260. At the beginning of the month of
May the company has inventory of 1,210 smartphones.
During the month of May, the company purchased additional 1,000
smartphones. By the end of May, the company had 490
smartphones remaining in the store. The selling and general
expenses for the company include wages and commissions, which
include fixed monthly payment of OMR1,100 plus a OMR4 per unit
sold; and depreciation of OMR2,000 per month. Assuming
a selling price per unit of OMR520, calculate the total
contribution margin
Solutions
Expert Solution
| Sales price per unit | 520 |
| Less: purchase cost | (260) |
| Less: variable wages and commissions | (4) |
| Contribution | 256 |
| Unit sold | 1,720 |
| Total contribution | 440,320 |
| Opening inventory | 1,210 |
| Purchases | 1,000 |
| Less: closing inventory | (490) |
| Sales unit | 1,720 |
Contribution = sales month- variables for the month
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