Stuart Manufacturing Produces Metal Picture Frames The Company Has No Beginning or Ending Inventories

question 108

Essay

Stuart Manufacturing produces metal picture frames.The company's income statements for the last two years are presented below:
$\begin{array}{|l|r|r|}\hline & \text { Last year } & \text { This year } \\\hline \text { Units sold } & 50,000 & 70,000 \\\hline \text { Sales } & \$ 800,000 & \$ 1,120,000 \\\hline \text { Less: Cost of goods sold } & 550,000 & \underline{710,000} \\\hline \text { Gross margin } & 250,000 & 410,000 \\\hline \text { Less: Operating expenses } & 150,000 & \underline{190,000} \\\hline \text { Net income } & \$ 100,000 & \$ 220,000 \\\hline\end{array}$
The company has no beginning or ending inventories.All activity in this problem is in the relevant range.
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.

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Definitions:

Economic Growth

An increase in the amount of goods and services produced per head of the population over a period of time, often measured as the annual percentage increase in real GDP.

Social Overhead Capital

Infrastructure and public goods provided by the government or public sector, essential for economic activities and societal well-being, such as roads, schools, and hospitals.

Developing Country

A nation with a lower level of industrialization, lower living standards, and lower Human Development Index scores compared to developed countries.

Private Sector

The part of the economy that is run by individuals and companies for profit and is not under direct state control.