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{ "quality": "blurry", "question_count": 1, "skills_matched": [ "step_cot", "blank_filling_formatter", "explain_then_answer", "tutor", "mastery_adaptive_brevity" ], "needs_drawing": false, "concepts_used": [ "Variable Cost", "Fixed Cost", "Contribution Margin Ratio", "Unit Contribution Margin", "Operating Income" ], "new_concepts": [], "current_concepts": [ "Variable Cost", "Fixed Cost", "Contribution Margin Ratio", "Unit Contribution Margin", "Operating Income" ] } ## Calculate total contribution margin Using the *Operating Income* and *Fixed Cost* knowledge points $$ \begin{aligned} \text{Total Contribution Margin} &= \text{Operating Income} + \text{Fixed Costs} \ &= \$3,184,100 + \$334,900 \ &= \$3,519,000 \end{aligned} $$ ## Calculate unit contribution margin Using the *Unit Contribution Margin* knowledge point $$ \begin{aligned} \text{Unit Contribution Margin} &= \frac{\text{Total Contribution Margin}}{\text{Units Sold}} \ &= \frac{\$3,519,000}{15,300 \text{ units}} \ &= \$230 \text{ per unit} \end{aligned} $$ ## Calculate variable cost per unit Using the *Variable Cost* knowledge point $$ \begin{aligned} \text{Variable Cost per Unit} &= \text{Selling Price per Unit} - \text{Unit Contribution Margin} \ &= \$420 - \$230 \ &= \$190 \text{ per unit} \end{aligned} $$ ## Calculate contribution margin ratio Using the *Contribution Margin Ratio* knowledge point $$ \begin{aligned} \text{Contribution Margin Ratio} &= \frac{\text{Unit Contribution Margin}}{\text{Selling Price per Unit}} \times 100\% \ &= \frac{\$230}{\$420} \times 100\% \ &\approx 54.76\% \end{aligned} $$ Sherrill Company sells 15,300 units at \$420 per unit. Fixed costs are \$334,900, and operating income is \$3,184,100. Determine the (a) variable cost per unit, (b) unit contribution margin, and (c) contribution margin ratio. Round the contribution margin ratio to two decimal places. a. Variable cost per unit: \$190 b. Unit contribution margin: \$230 per unit c. Contribution margin ratio: 54.76% { "subject": "Business", "question_type": "Fill-in-the-blank", "knowledge_point": [ "Business", "Accounting", "Cost-Volume-Profit Analysis" ] }

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Calculate total contribution margin

Calculate unit contribution margin

Calculate variable cost per unit

Calculate contribution margin ratio

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