Question

Macy Corporation's relevant range of activity is 8,400 units to 17,000 units. When it produces and sells 12,700 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 5.55 Direct labor $ 4.00 Variable manufacturing overhead $ 2.00 Fixed manufacturing overhead $ 3.60 Fixed selling expense $ 1.30 Fixed administrative expense $ 0.60 Sales commissions $ 1.25 Variable administrative expense $ 0.50 If the selling price is $32.50 per unit, the contribution margin per unit sold is closest to: Multiple Choice $19.20 $22.95 $11.55 $7.35

Answer 1

Contribution margin per unit= $19.2

Step-by-step explanation:

The contribution margin is calculated as follow:

Contribution margin per unit= selling price - total unitary variable cost

Direct materials $5.55

Direct labor $4.00

Variable manufacturing overhead $2.00

Sales commissions $1.25

Variable administrative expense $0.50

Total variable cost per unit= $13.3

Contribution margin per unit= 32.5 - 13.3

Contribution margin per unit= $19.2