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Assume Segway produces and sells Segway helmets for kids. Further assume Segway offered these helmets at a special price of $ 1 2 0 each.
Assume Segway produces and sells Segway helmets for kids. Further assume Segway offered these helmets at a special price of $ each. Variable and fixed costs follow.
Suppose in June, Segway produced and sold helmets.
Required
a Prepare a contribution income statement for June.
b Calculate and explain the relevance of Segway's unit contribution margin and contribution margin ratio.
Contribution margin per unit
Contrubution margin ratio
For each helmet sold at $Segway had $
more to cover fixed costs and contribute toward profit. Stated another way,
of the revenue was left to cover fixed costs and contribute toward profit. In the shortterm, as long as there is capacity, Segway
continue producing and selling the helmets.
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