Suppose Kathy Lentz Company sells hand tatted lace for $25 per yard

Accounting Oct 21, 2020

Suppose Kathy Lentz Company sells hand tatted lace for $25 per yard. Her materials cost $4 per yard and labor costs her $10 per yard. She also estimates her fixed cost to be $50 per month. If she sells 2,000 yards of lace during the month, what is her contribution margin ratio?

Expert Solution

Computation of the contribution margin ratio:-

Contribution margin per unit = Selling price per unit - Variable cost per unit

= $25 - ($4 + $10)

= $25 - $14

= $11

Contribution margin ratio = Contribution margin per unit / Selling price per unit

= $11 / $25

= 44%

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote