Question

Direct materials $ 7.20 Direct labor $ 4.50 Variable manufacturing overhead $ 1.25 Fixed manufacturing overhead $ 23,800 Sales commissions $ 1.30 Variable administrative expense $ 0.55 Fixed selling and administrative expense $ 8,200 If the selling price is $27.50 per unit, the contribution margin per unit sold is closest to:

Answer 1

Unitary contribution margin= $12.7

Step-by-step explanation:

Giving the following information:

Direct materials $ 7.20

Direct labor $ 4.50

Variable manufacturing overhead $ 1.25

Sales commissions $ 1.30

Variable administrative expense $ 0.55

Selling price is $27.50 per unit

The contribution margin per unit is the deduction of all the unitary variable costs from the selling price.

Total unitary variable cost= 7.2 + 4.5 + 1.25 + 1.3 + 0.55= $14.8

Unitary contribution margin= 27.5 - 14.8

Unitary contribution margin= $12.7