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Problem: Joe's Tabletops
"Joe's Tabletops produces fine tabletops."
The company's income statements for two months during the last year are given below:
APRIL
JULY
Units sold
5000
7000
Sales
$8,000,000
$11,200,000
Cost of goods sold
$5,500,000
$7,100,000
Gross margin
$2,500,000
$4,100,000
Selling & administrative expense
$1,500,000
$1,900,000
Net operating income
$1,000,000
$2,200,000
The company has no beginning or ending inventories.
1) Estimate the company's total variable cost per unit and its total fixed costs per year.
2) Compute the company's contribution margin for July.
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