00:01
Okay, so we're going to be looking at this business and it has provided this contribution format income statement for june.
00:10
The company produces and sells a single product.
00:13
Okay, so we're given the following information.
00:17
Let's find out how useful this information is going to be in determining what is required here to say what is contribution margin should be.
00:30
So we are basically looking at the sales.
00:35
Okay, so we're basically given the sales is actually 2 ,800 units.
00:46
So it sells in units as well as in dollar terms, which is 263 and $200.
00:56
$263 ,200.
00:59
That is the sales.
01:00
And the variable costs that are given, the variable costs given in dollar terms of $106 ,400, then contribution margin, i'll just call it cm here, the purpose of clarity, contribution margin, is given in dollar terms as $156 ,800.
01:27
Then the fixed costs are given as $135 ,000.
01:32
Thousand dollars and the operating profit opi is given as 100 this 21 ,000 it's just a clarity is actually 21 ,800.
01:52
Okay so if the company sells 3 ,000 units it's total contribution margin so we want to find this total contribution margin if it sells 3 ,000 units if it sells 3 ,000 units okay if it sells 3 ,000 units what is the contribution margin okay so the first thing that we'll need to do we understand that the formula of the contribution margin should be basically sales revenue minus the variable costs divided by the sales revenue that's basically how it determine the contribution margin.
02:41
So we now have to find out what the variable cost per unit is.
02:47
And with the information that is given, we should be able to do that.
02:51
It's actually 106, 400 that we got the variable cost.
02:57
And we look at the number of units that we sold, which was 2 ,800.
03:02
So we basically now know that the variable cost per unit is 38.
03:07
So therefore, the variable costs for 3 ,000 units is basically 38 times 3 ,000, which gives us 114 ,000 dollars...