Best Detroit Asphalt Inc., a manufacturer of premium quality asphalt (A+ Guaranteed)

Best Detroit Asphalt Inc., a manufacturer of premium quality asphalt, has given you the following data as is requesting your help:

Tons of asphalt produced and sold ………………….…… 220,000

Sales revenue ……………………………………………… $924,000

Variable manufacturing expense ………………………… $297,000

Fixed manufacturing expense ……………………………. $280,000

Variable selling and admin expense ………………………$165,000

Fixed selling and admin expense ………………………….. $82,000

Net operating income ………………………………………  $100,000

Required:

a. Calculate the company’s unit contribution margin.

b. Calculate the company’s unit contribution ratio.

c. If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the company’s net operating income be?

Here’s the SOLUTION

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