Stuart Manufacturing produces metal picture frames. The company’s income statements for the last two years are given below

  

Last Year

This Year

 

Unit sold

50000

70000

 

Sales

800000

1120000

 

Less: Cost of goods   sold

550000

710000

 

Gross margin

250000

410000

 

Less: Operating   expenses

150000

190000

 

Net income

100000

220000

The company has no beginning or ending inventories.

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.