Question

Choice​ Creations, Inc. sells hand sewn shirts at $ 44.00 per shirt. It incurs monthly fixed costs of $ 6 comma 000. The contribution margin ratio is calculated to be 30​%. What is the variable cost per​ shirt? (Round any intermediate calculations and your final answer to two decimal​ places.)

Answer 1

$30.80

Step-by-step explanation:

According to the situation, the solution is as follows:

The variable cost per shirt is

Since the selling price per shirt is $44

And, the contribution margin ratio is 30%

So, the variable cost margin ratio is 70%

Now the variable cost per shirt is

= Selling price per shirt × variable cost margin ratio

= $44 × 70%

= $30.80

Hence, the variable cost per shirt is $30.80