Concept introduction:
Contribution margin ratio:
Contribution margin ratio refers to the percentage of sales which is available to cover fixed costs and profit. In other words we can say that a ratio which is calculated on the basis of contribution margin per unit and sale price per unit, is known as contribution margin ratio.
Requirement 1:
Contribution margin ratio for each model.
Concept introduction:
Contribution margin ratio:
Contribution margin ratio refers to the percentage of sales which is available to cover fixed costs and profit. In other words we can say that a ratio which is calculated on the basis of contribution margin per unit and sale price per unit, is known as contribution margin ratio.
Requirement 2:
Which company’s smartphone sales contribute more to covering fixed costs?
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Managerial Accounting
- A company has three types of products: gadgets, widgets, and gizmos. The cost and market price of each type is listed below. Complete the table by applying the lower of cost and net realizable value (LCNRV). Do not enter dollar signs or commas in the input boxes. Description Category Cost NRV Individual LCNRV Applied to Category Total Gadget Type 1 Gadgets $1,170 $1,000 $ Gadget Type 2 Gadgets $5,700 $5,600 $ Total Gadgets Widget A Widgets $140 $150 $ Widget B Widgets $130 $190 $ Total Widgets $ tA Gizmo 1 Gizmos $2,280 $2,450 $ Gizmo 2 Gizmos $2,280 $1,630 $ Total Gizmos Total $ A $ EA SA SA EA Aarrow_forwardA company produces and sells a product. The company has found that the costto produce x units of the product is given by C(x) = 50x + 200 (in dollars),and the revenue from selling x units is given by R(x) = 100x - x? (in dollars).What is the number of units the company should produce and sell to maximize profitarrow_forwardCompany XYZ sells two products: AAA and BBB. Product BBB has a lower selling price but higher contribution margin compared to product AAA. Assume that the factory has fixed production capacity. If Company XYZ decided to produce and sell more units of product BBB compared to product AAA, which one of the following is likely to happen? Select one: O a. Total profits will remain the same O b. Total profits will decrease O c. Total profit will increase O d. None of the given answers O e. Total sales will increasearrow_forward
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