Part A
Wilson Company sells lawn ornaments (rocks) with university athletic logos.The selling price of each lawn ornament is $25.00.The variable costs associated with each lawn ornament are $15.00 and the fixed costs for the company are $100,000 per year.Ignore income taxes.
Required
Part B
Bearcat Paws produces two sizes of Christmas Ornaments.The selling prices and variable costs are as follows:
Small Large
Selling price per ornament $8.00 $20.00
Variable cost per ornament 4.00 8.00
The company sells three small Christmas ornaments for every large Christmas ornament.
The contribution margin income statement for the year ended December 31, 2015 follows:
Sales revenue $225,000
Variable costs 90,000
Contribution margin 135,000
Fixed costs 75,000
Profit $60,000
Required
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