Fancy Scarf Factory Contribution Margin The managerial accountant at Fancy Scarf Factory reported the price per scarf is $22. The only variable cost is $15 per scarf. The managerial accountant also reported that the sales goals were increased to 1000 scarves during the next quarter. First, compute the unit contribution margin per scarf. If fixed expenses are $5000, what is the forecasted operating income if 1000 scarves are sold in the next quarter?

Question

Fancy Scarf Factory Contribution Margin  The managerial accountant at Fancy Scarf Factory reported the price per scarf is $22. The only variable cost is $15 per scarf. The managerial accountant also reported that the sales goals were increased to 1000 scarves during the next quarter. First, compute the unit contribution margin per scarf. If fixed expenses are $5000, what is the forecasted operating income if 1000 scarves are sold in the next quarter?

Quizplus · Accepted Answer

- Unit contribution margin per scarf = Price per scarf - Variable cost per scarf = $22 - $15 = $7
- Operating income = (Sales quantity * Unit contribution margin per scarf) - Fixed expenses = (1000 * $7) - $5000 = $2000

Fancy Scarf Factory Contribution Margin the Managerial Accountant at Fancy