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Home / Assignment Help / Ash company reported sales of \$410,000 for year 1, \$460,000 for year 2, and \$510,000 for year 3. using year 1 as the base year, what were the percentage increases for year 2 and year 3 compared to the base year

# Ash company reported sales of \$410,000 for year 1, \$460,000 for year 2, and \$510,000 for year 3. using year 1 as the base year, what were the percentage increases for year 2 and year 3 compared to the base year

The Contribution Margin per unit (CM) can be calculated
from the difference of Selling Price per unit (SP) and Total Expenses per unit
(TE).

First, let’s calculate the value of SP:

SP = Sales / Units sold

SP = \$1,043,400 / 22,200 units sold

SP = \$47

Second, calculate all expenses:

Direct materials per unit = \$234,948 / 27,970 units
manufactured = \$8.4

Direct labor per unit = \$131,459 / 27,970 units
manufactured = \$4.7

Variable manufacturing overhead per unit = \$240,542 / 27,970
units manufactured = \$8.6

Variable selling expenses per unit = \$113,220 / 22,200
units sold = \$5.1

TE = \$26.8

Therefore the CM is:

CM = SP – TE

CM = \$47 – \$26.8

CM = \$20.2 per unit