Problem
Joe's Tabletops
Joe's Tabletops produces fine tabletops. The company's income statements for two month during the last year are given below:
|
|
April
|
July
|
|
Units sold
|
5,000
|
7,000
|
|
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.
Required:
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.