MANAGERIAL ACCOUNTING – QUESTION 1

Use excel or word only. Provide all supporting calculations to show how you arrived at your numbers

Part A: Fixed and Variable Cost

Stuart Manufacturing produce metals pictures frames. The Company’s income statement for the last two years are given below

Last Year                This Year

Units Sold                                                       50,000                  70,000

Sales                                                               $80,000              $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:

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

b. Compute the company’s contribution margin for this year.