Reference no: EM132591030

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

                                                    Last year                    This year

Units sold                                50,000                     70,000

Sales                                        $800,000               $1,120,000

Less cost of goods sold                 550,000                  710,000

Gross margin                                250,000                     410,000

Less operating expenses                  150,000                        190,000

Net 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 ththis is a manufacturing firm.)

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