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Question 19.2: Molly Company sells 20,000 units at $12 per unit. Variable c...

Molly Company sells 20,000 units at $12 per unit. Variable costs are $9 per unit, and fixed costs are $25,000. Determine the (a) contribution margin ratio, (b) unit contribution margin, and (c) income from operations.

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a.     25% = ($12 – $9)/$12, or ($240,000 – $180,000)/$240,000

b.     $3 per unit = $12 – $9

c.      Sales                                         $240,000                      (20,000 units × $12 per unit)

Variable costs                           180,000                      (20,000 units × $9 per unit)

Contribution margin             $ 60,000                      [20,000 units × ($12 – $9)]

Fixed costs                                  25,000

Income from operations      \underline{\underline{\$ \ 35,000}} 

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