Stuart manufacturing produces metal picture frames. the company’s
Stuart Manufacturing produces metal picture frames. The company’s income statements for the last two years are given below
Last Year
This Year
Unit sold
50000
70000
Sales
800000
1120000
Less: Cost of goods sold
550000
710000
Gross margin
250000
410000
Less: Operating expenses
150000
190000
Net income
100000
220000
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.