Problem: Joe's Tabletops
"Joe's Tabletops produces fine tabletops."
The company's income statements for two months during the last year are given below:
|
|
APRIL
|
JULY
|
|
Units sold
|
5000
|
7000
|
|
Sales
|
$8,000,000
|
$11,200,000
|
|
Cost of goods sold
|
$5,500,000
|
$7,100,000
|
|
Gross margin
|
$2,500,000
|
$4,100,000
|
|
Selling & administrative expense
|
$1,500,000
|
$1,900,000
|
|
Net operating income
|
$1,000,000
|
$2,200,000
|
The company has no beginning or ending inventories.
1) Estimate the company's total variable cost per unit and its total fixed costs per year.
2) Compute the company's contribution margin for July.