Question

Red Hawk Enterprises sells handmade clocks. Its variable cost per clock is $8, and each clock sells for $18. Calculate Red Hawk’s unit contribution margin and contribution margin ratio. Suppose Red Hawk sells 2,000 clocks this year. Calculate the total contribution margin.

Answer 1

Instructions are listed below

Step-by-step explanation:

Giving the following information:

Its variable cost per clock is $8.

Each clock sells for $18.

Suppose Red Hawk sells 2,000 clocks this year.

A) contribution margin= selling price - variable costs= 18-8= $10

B) Contribution margin rate= contribution margin/ selling price= 10/18= 0.5556

C= Total contribution margin= units* contribution margin= 2000*10= $20,000