Concept explainers
The Stark Company manufactures a product that is expected to incur $20 per unit in variable production costs and sell for $40 per unit. The sales commission is 10% of the sales price. Due to intense competition, Stark actually sold 200 units for $38 per unit. The actual variable production costs incurred were $23.75 per unit. Calculate the total contribution margin and contribution margin ratio at the expected price/costs and the actual price/costs. How might management use this information?
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