Stuart Manufacturing Produces Metal Picture Frames The Company Has No Beginning or Ending Inventories

Essay

Stuart Manufacturing produces metal picture frames.The company's income statements for the last two years are presented below:
$\begin{array}{|l|r|r|}\hline & \text { Last year } & \text { This year } \\\hline \text { Units sold } & 50,000 & 70,000 \\\hline \text { Sales } & \$ 800,000 & \$ 1,120,000 \\\hline \text { Less: Cost of goods sold } & 550,000 & \underline{710,000} \\\hline \text { Gross margin } & 250,000 & 410,000 \\\hline \text { Less: Operating expenses } & 150,000 & \underline{190,000} \\\hline \text { Net income } & \$ 100,000 & \$ 220,000 \\\hline\end{array}$
The company has no beginning or ending inventories.All activity in this problem is in the relevant range.
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.