Vaughn,Inc

question 11

Essay

Vaughn,Inc.sold 17,000 units last year for $50 each.Variable costs per unit were $15 for direct materials,$15 for direct labor,and $10 for variable overhead.Fixed costs were $10,000 in manufacturing overhead and $50,000 in nonmanufacturing costs.
a.What is the total contribution margin?
b.What is the unit contribution margin?
c.What is the contribution margin ratio?
d.If sales increase by 5,000 units,by how much will profits increase?

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Definitions:

All Equity

A financing structure where a company's capital structure is composed entirely of equity without any debt.

Repurchase Shares

The action taken by a company to buy back its own shares from the marketplace, reducing the amount of outstanding stock.

Borrowing

The act of obtaining funds from another party, often a financial institution, with a promise to repay the principal amount along with interest or other charges over a period.

All Equity

A financial structure where a company is financed entirely through equity without any debt.