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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.
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