EXERCISE 6-10 (20 MINUTES) TOTAL PER UNIT

2. Sales (20,000 units × 1.25 = 25,000 units) ... $337,500 $13.50

Less variable expenses ... 225,000 9.00

Contribution margin ... 112,500 $ 4.50

Less fixed expenses... 70,000

Net operating income ... $ 42,500