Ask Question
18 September, 00:12

Red Hawk Enterprises sells handmade clocks. Its variable cost per clock is $5.20, and each clock sells for $13.00. Calculate Red Hawk's unit contribution margin. Calculate Red Hawk's contribution margin ratio. Suppose Red Hawk sells 2,250 clocks this year. Calculate the total contribution margin.

+5
Answers (1)
  1. 18 September, 00:56
    0
    Contribution margin per unit = $7.8

    Contribution Margin Ratio = 60% or 0.6

    Total contribution margin at 2250 units = $17550

    Explanation:

    The unit contribution is the difference in the unit selling price and unit variable cost for a product.

    The unit contrbution margin for Red Hawk = 13 - 5.2 = $7.8 per unit

    The contribution margin ratio simply represents the unit contribution margin as a percentage of selling price.

    The contribution margin ratio = contribution margin per unit / selling price per unit

    For Red Hawk CM Ratio = 7.8 / 13 = 0.6 or 60%

    Total Contribution margin at 2250 units = 7.8 * 2250 = $17550
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Red Hawk Enterprises sells handmade clocks. Its variable cost per clock is $5.20, and each clock sells for $13.00. Calculate Red Hawk's ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers