Answered step by step
Verified Expert Solution
Question
1 Approved Answer
3. The Stark Company manufactures a product that is expected to incur $20 per unit in variable production costs and sell for $40 per
3. The Stark Company manufactures a product that is expected to incur $20 per unit in variable production costs and sell for $40 per unit. The sales commission is 10% of the sales price. Due to intense competition, Stark actually sold 200 units for $38 per unit. The actual variable production costs incurred were $23.75 per unit. Calculate the total contribution margin and contribution margin ratio at the expected price/costs and the actual price/costs. How might management use this information? Complete the expected contribution margin by entering the appropriate amounts to calculate the total contribution margin and contribution margin ratio. (Enter the contribution margin ratio to two decimal place, X.XX%.) Expected Contribution Margin Net Sales Revenue Variable Costs: Production Costs Sales Commission Contribution Margin Contribution Margin Ratio % Complete the actual contribution margin by entering the appropriate amounts to calculate the total contribution margin and contribution margin ratio. (Enter the contribution margin ratio to two decimal place, X.XX%.) Actual Contribution Margin Net Sales Revenue Variable Costs: Production Costs Sales Commission Contribution Margin Contribution Margin Ratio How might management use this information? The actual results varied significantly from the expected results, both in total contribution margin and contribution margin ratio. Management should investigate the cause(s) for the difference in the company may decide to the contribution margin. Also, because the prediction was significantly different from the actual results, management may also want to evaluate the methods the company uses to The
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started