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Homework answers / question archive / United Merchants Company sells 24,000 units at $41 per unit
United Merchants Company sells 24,000 units at $41 per unit. Variable costs are $30.75 per unit, and fixed costs are $100,900.
Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) income from operations.
a) Contribution margin ratio.
b) Unit contribution margin.
c) Income from operations.
a) Computation of the contribution margin ratio:-
Contribution margin ratio = (Selling price per unit - Variable cost per unit) / Selling price per unit
= ($41 - $30.75) / $41
= $10.25 / $41
= 25%
b) Computation of the unit contribution margin:-
Unit contribution margin = Selling price per unit - Variable cost per unit
= $41 - $30.75
= $10.25
c) Computation of the income from operations:-
Income from operations = (Units contribution margin * Number of units sold) - Fixed costs
= ($10.25 * 24,000) - $100,900
= $246,000 - $100,900
= $145,100
