Question

Kogler Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 5.20 Direct labor $ 5.40 Variable manufacturing overhead $ 2.00 Fixed manufacturing overhead $ 9.00 Fixed selling expense $ 3.80 Fixed administrative expense $ 1.50 Sales commissions $ 0.70 Variable administrative expense $ 0.65 If the selling price is $28.00 per unit, the contribution margin per unit sold is closest to:

Answer 1

the contribution margin per unit is $14.05

Step-by-step explanation:

The computation of the contribution margin per unit is shown below;

As we know that

Contribution Margin per unit = Selling price per unit - Variable costs per unit

= ($28) - ($5.20 + $5.40 + $2 + $0.70 + $0.65)

= $28 - $13.95

= $14.05

Hence, the contribution margin per unit is $14.05