Red Hawk Enterprises sells handmade clocks. Its variable cost per clock is $8, and each clock sells for $18. Calculate Red Hawk's unit contribution margin and contribution margin ratio. Suppose Red Hawk sells 2,000 clocks this year. Calculate the total contribution margin.

Question

Business

Dominick Mckinney

24 September, 10:32

Red Hawk Enterprises sells handmade clocks. Its variable cost per clock is $8, and each clock sells for $18. Calculate Red Hawk's unit contribution margin and contribution margin ratio. Suppose Red Hawk sells 2,000 clocks this year. Calculate the total contribution margin.

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Answers (1)

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Seamus Calderon · Answer 1

Instructions are listed below

Explanation:

Giving the following information:

Its variable cost per clock is $8.

Each clock sells for $18.

Suppose Red Hawk sells 2,000 clocks this year.

A) contribution margin = selling price - variable costs = 18-8 = $10

B) Contribution margin rate = contribution margin / selling price = 10/18 = 0.5556

C = Total contribution margin = units * contribution margin = 2000*10 = $20,000