A tile manufacturer has supplied the following data: Boxes of tile produced and sold

580,000 Sales revenue $2,842,000 Variable manufacturing expense $1,653,000 Fixed

manufacturing expense $784,000 Variable selling and admin expense $145,000 Fixed
selling and admin expense $128,000 Net operating income $132,000

Required: a. Calculate the company's unit contribution margin

Contribution margin = Sales - Variable expenses

Contribution margin = $2,842,000 - ($1,653,000 + $145,000)
Contribution margin = $1,044,000
Unit contribution margin = Contribution margin Boxes of tiles
Unit contribution margin = $1,044,000 580,000
Unit contribution margin = $1.8

b. Calculate the company's unit contribution ratio

Contribution margin ratio = Contribution margin Sales

Contribution margin ratio = $1,044,000 $2,842,000
Contribution margin ratio = 36.74% (rounded)

c. If the company increases its unit sales volume by 5% without increasing its fixed
expenses, what would the company's net operating income be?

Contribution margin = Sales - Variable expenses

Contribution margin = $2,132,000 - ($650,000 + $260,000)
Contribution margin = $1,222,000
Unit contribution margin = Contribution margin Boxes of tiles
Unit contribution margin = $1,222,000 520,000
Unit contribution margin = $2.35
Increase in sales units = 580,000 x 5% = 29,000 units
Increase in net operating income = Unit contribution margin x Increase in sales units
= $1.8 x 29,000
= $52,200
New net operating income = Current net operating income + Increase
= $132,000 + $52,200
= $184,200