Question

Required information [The following information applies to the questions displayed below.] Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Average Cost Per Unit Direct materials $ 6.30 Direct labor $ 3.80 Variable manufacturing overhead $ 1.50 Fixed manufacturing overhead $ 4.00 Fixed selling expense $ 3.30 Fixed administrative expense $ 2.00 Sales commissions $ 1.00 Variable administrative expense $ 0.50 13. If the selling price is $22.30 per unit, what is the contribution margin per unit? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answer 1

Contribution margin= $10,2

Step-by-step explanation:

The formula to calculate the contribution margin is:

CM= Price - variable costs

First, we need to determine which cost are variable:

Cost Per Unit Direct materials $ 6.30

Direct labor $ 3.80

Variable manufacturing overhead $1.50

Variable administrative expense $ 0.50

Total variable cost= $12.1

Cm= $22.30 - $12.1= $10,2