Reference no: EM132497458

Fixed and Variable Cost

Stuart Manufacturing produces metal picture frames. The company's income statements for the last two years are given below:

Last year This year

Units sold................................................... 50,000 70,000
Sales........................................................... $800,000 $1,120,000
Cost of goods sold ..................................... 550,000 710,000
Gross margin ............................................. 250,000 410,000
Selling and administrative expense ........... 150,000 190,000
Net operating income ................................ $100,000 $ 220,000

• The company has no beginning or ending inventories.

Required:

Question a. Estimate the company's total variable cost per unit and its total fixed costs per year. (Remember that this is a manufacturing firm.)

Question b. Compute the company's contribution margin for this year.

Attachment:- fixed cost.zip