Question

ACME Inc. manufactures components. One of its products, which is used in the construction of consumer products, is known as XsR. Data concerning this product are given below: Per Unit Selling price $ 220 Direct materials $ 38 Direct labor $ 1 Variable manufacturing overhead $ 8 Fixed manufacturing overhead $ 16 Variable selling expense $ 4 Fixed selling and administrative expense $ 16 The above per unit data are based on annual production of 4,000 units of the component. Assume that direct labor is a variable cost. What is the current contribution margin per unit for component XsR based on its selling price of $220 and its annual production of 4,000 units

Answer 1

Contribution margin per units= $169

Step-by-step explanation:

Giving the following information:

Selling price $ 220

Direct materials $38

Direct labor $ 1

Variable manufacturing overhead $8

Variable selling expense $ 4

The contribution margin per unit is calculated deducting from the selling price all the variable components:

Total unitary variable cost= $51

Contribution margin per units= 220 - 51

Contribution margin per units= $169