Craig Company Inc. earns a contribution margin ratio of 36% on its main product sold at $120

Question:

Craig Company Inc. earns a contribution margin ratio of 36% on its main product sold at $120 per unit. Assume that the annual break-even point is 80,000 units.

Required:

1. Compute the annual fixed costs.

2. What is the contribution margin for every unit sold beyond the break-even point?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...

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