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 $ 5.15 Direct labor $ 5.30 Variable manufacturing overhead $ 1.95 Fixed manufacturing overhead $ 8.00 Fixed selling expense $ 3.75 Fixed administrative expense $ 1.40 Sales commissions $ 0.60 Variable administrative expense $ 0.55 If the selling price is $26.00 per unit, the contribution margin per unit sold is closest to:

Answer 1

$12.45

Step-by-step explanation:

Calculation to determine what the contribution margin per unit sold is closest to:

First step is to calculate the Variable cost per unit using this formula

Variable cost per unit = Direct materials per unit + Direct labor per unit + Variable manufacturing overhead per unit + Sales commissions per unit + Variable administrative expense per unit

Let plug in the formula

Variable cost per unit = $5.15 + $5.30 + $1.95 + $0.60 + $0.55

Variable cost per unit = $13.55

Now let determine the Contribution margin per unit using this formula

Contribution margin per unit = Selling price per unit - Variable cost per unit

Let plug in the formula

Contribution margin per unit = $26.00 - $13.55

Contribution margin per unit = $12.45

Therefore the contribution margin per unit sold is closest to:$12.45