Question

During the next year, sales of Fluoro2211 are expected to be 10,000 units. All costs will remain the same except for fixed manufacturing overhead, which will increase by 20%, and material, which will increase by 10%. The selling price per unit for next year will be $160. Based on these data, Razor Inc.'s total contribution margin for next year will be:

Answer 1

$1,080,000

Step-by-step explanation:

Calculation to determine what Razor Inc.'s total contribution margin for next year will be:

First step is to calculate the Total cost

Selling price per unit for next year $160

Less Direct Materials ($22)

(110%*20)

Less Direct Labor ($15)

Less Variable Manufacturing Overhead ($12)

Less Variable Selling ($3)

Total $108

Now let calculate the Next year contribution margin

Next year contribution margin=$108*10,000 units

Next year contribution margin= $1,080,000

Therefore Razor Inc.'s total contribution margin for next year will be:$1,080,000