Question

Variable Cost, Fixed Cost, Contribution Margin Income Statement

Chillmax Company plans to sell 3,500 pairs of casual shoes at $60 each in the coming year. Product costs include:

Direct materials per pair $ 12
Direct labor per pair 4
Variable factory overhead per pair 2
Total fixed factory overhead 30,000

Variable selling expense is a commission of $3 per pair; fixed selling and administrative expense totals $48,000.

(a) Calculate the total variable cost per unit.
(b) Calculate the total fixed expense for the year.

Answer 1

Instructions are listed below.

Step-by-step explanation:

Giving the following information:

Direct materials per pair $ 12

Direct labor per pair 4

Variable factory overhead per pair 2

Total fixed factory overhead 30,000

Variable selling expense is a commission of $3 per pair; fixed selling and administrative expense totals $48,000.

A) total variable cost:

Variable cost= direct material + direct labor + variable overhead + variable selling comission

Variable cost= 12 + 4 + 2 + 3= $21

B) Total fixed expense= fixed overhead + fixed selling and administrative= 30,000 + 48,000= $78,000