Stuart Manufacturing produces metal picture frames. The company’s income statements for the last two years are given below
Last Year
This Year
Unit sold
50000
70000
Sales
800000
1120000
Less: Cost of goods sold
550000
710000
Gross margin
250000
410000
Less: Operating expenses
150000
190000
Net income
100000
220000
The company has no beginning or ending inventories.
Required:
a. Estimate the company’s total variable cost per unit and its total fixed costs per year. (Remember that this is a manufacturing firm.)
b. Compute the company’s contribution margin for this year.
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