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30 June, 18:04

Frazier Company sells women's ski jackets. The average sales price is $272 and the variable cost per jacket is $122. Fixed Costs are $1,247,000. I razier sells 14,700 jackets, the contribution margin will be:a.$958,000 b.$2,205,000 c.$2.751400 d.$835,400

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  1. 30 June, 18:05
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    b. $2,205,000

    Explanation:

    We know,

    Contribution Margin = Sales (Revenues) - Variable Cost (expense)

    Contribution margin is the difference between sales and variable cost.

    Given,

    Sales per unit = $272

    Variable cost per unit = $122

    Sales volume (Number of Ski Jackets) = 14,700 jackets

    Now, we use contribution margin format income statement to determine the contribution margin for 14,700 jackets.

    Sales ($272 * 14,700 jackets) $3,998,400

    Less: Variable expense ($122 * 14,700 jackets) $ (1,793,400)

    Contribution Margin [ ($272 - 122) * 14,700 jackets] = $2,205,000

    Therefore, option B is the answer.
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