Henry Timepieces manufactures two styles of watches the Digital and the Classic. The following data pertain to
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Variable manufacturing cost.................................................................................. $ 120
Variable operating cost......................................................................................... $ 50
Sale price............................................................................................................... $ 250
The company’s monthly fixed expenses total $ 200,000. When Digitals and Classics are sold in the mix of 8:2, respectively, the sale of 2,200 total watches results in an operating income of $ 75,000. Compute the contribution margin per watch for the Classic.
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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