Question

Macy Corporation's relevant range of activity is 4,000 units to 8,000 units. When it produces and sells 6,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 4.95 Direct labor $ 3.25 Variable manufacturing overhead $ 1.45 Fixed manufacturing overhead $ 4.20 Fixed selling expense $ 1.05 Fixed administrative expense $ 0.60 Sales commissions $ 1.00 Variable administrative expense $ 0.50 If the selling price is $23.50 per unit, the contribution margin per unit sold is closest to:

Answer 1

$12.35

Step-by-step explanation:

Given that,

Direct materials = $ 4.95

Direct labor = $ 3.25

Variable manufacturing overhead = $ 1.45

Fixed manufacturing overhead = $ 4.20

Fixed selling expense = $ 1.05

Fixed administrative expense = $ 0.60

Sales commissions = $ 1.00

Variable administrative expense = $ 0.50

Selling price = $23.50 per unit

Total Variable cost:

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

= $4.95 + $3.25 + $1.45 + $1.00 + $0.50

= $11.15

Contribution margin per unit:

= Selling price per unit - Variable cost per unit

= $23.50 - $11.15

= $12.35