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Calculate the contribution margin for each unit produced

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Reference no: EM132587232

The year has passed and Ron has become used to being able to come to you with more and more complex finance and accounting questions about this Ukrainian Division. He has come into your office in the middle of November of the following year. Your projects are going quite well as he has a new task for you. He's been reviewing the operations of the Ukrainian plant and has some questions about the Income Statement. The plant appears to be much more profitable than the other bottling plants within the company and he's wondering about implementing some of the practices that he has seen there into Canadian Bottling sites. He has provided you with the Income Statement that the Canadian finance team has provided him and wants some key pieces of information from you.

Ukrainian Bottling Company Inc.

Income Statement

For the Year Ended October 31st, XXXX

Revenue $650,000.00

Cost of Goods Sold

Labour $75,000.00

Material $50,000.00

Total Cost of Goods Sold $125,000.00

Gross Profit $525,000.00

Expenses

Packaging Labour $67,000.00

Electricity $14,000.00

Amortization $32,000.00

Rent $15,000.00

Shipping $160,000.00

Total Expenses $288,000.00

Net Income $237,000.00

An executive summary of their financial position has been provided by the Ukrainian Management team; all of this information appears to be useful to them but, only some is relevant to you. Highlights of the financial figures are as follows:

Current number of unit produced: 12,000

Number of Employees on Staff: 521

Original cost of Smelting Machinery: $85,000

Number of Shares Outstanding: 125,000

Trading Price per Share: $12

Question 1. Using your cost behaviour breakdown, calculate the Contribution Margin for each unit produced.

Question 2. What would be the number of units necessary to produce for a breakeven scenario?

Question 3. Calculate the Gross Profit Margin and Net Profit Margin Ratios

Reference no: EM132587232

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