The following is information concerning a product manufactured by Ames Brothers: Sales price per unit . .

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The following is information concerning a product manufactured by Ames Brothers:

Sales price per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $70

Variable cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Total fixed manufacturing and operating costs (per month) . . . 405,000

Determine the following:

a. The unit contribution margin.

b. The number of units that must be sold each month to break even.

c. The unit sales level that must be reached to earn an operating income of $270,000 per month.


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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Financial and Managerial Accounting the basis for business decisions

ISBN: 978-0078111044

16th edition

Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello

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