Rain until September co makes a product, the splash,which has a variable production cost of 6$ per unit and a sales price of 19$ per unit. At the beginning of September 20X0, there were no opening inventories and production during the month was 20,000 units. Fixed costs for the month were 45000$(production,administration,sales and distribution). There were no variable marketing costs.
Required
Calculate the contribution and profit for September 20X0, using marginal costing principles, if sakes were as follows.
a) 10000 splashes
b) 15000 splashes
c) 20000splashes
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MAMariginal cost and contribution explanation with the below xample
(a)
Welcome to the Opentuition forums. I doubt the original poster needs this information any longer but for anyone coming across this thread-
a)Contribution $19-$6=$13
10000 x $13 =$130000
$130000- $45000=$85000 profit using marginal method.
b)Contribution as above $13 per unit.
15000 x $13 =$195000
$195000- $45000= $150000 profit using this method.
c) Contribution as above $13
20000 x $13=$260000
$260000-$45000= $215000 profit using this method.
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