Question

Macy Corporation's relevant range of activity is 8,700 units to 17,500 units. When it produces and sells 13,100 units, its average costs per unit are as follows:


Average Cost per Unit
Direct materials $5.6
Direct labor $4.05
Variable manufacturing overhead $2.05
Fixed manufacturing overhead $3.8
Fixed selling expense $1.35
Fixed administrative expense $0.65
Sales commissions $1.3
Variable administrative expense $0.55

If the selling price is $33.00 per unit, the contribution margin per unit sold is closest to:

a. $11.70
b. $7.50
c. $23.35
d. $19.45

Answer 1

Answer:

Contribution margin  = $19.45

Explanation:

solution

we get here first total Variable cost that is express as

total Variable cost  = Direct materials  + Direct labor  + Variable manufacturing overhead  + Sales commissions  + Variable administrative expense  .....................1

put here value we get

total Variable cost =  5.6  +4.05  + 2.05  + 1.3  + 0.55

total Variable cost  =  $13.55

so now we get

Contribution margin that is

Contribution margin = Sales - total Variable cost   ...................2

Contribution margin = 33 - 13.55  

Contribution margin  = $19.45