The following cost information pertained to the Violin Division of Stringing Music Co. and was based...
The following cost information pertained to the Violin Division of Stringing Music Co. and was based on monthly demand and sales of 100 units:
| Per-Unit Costs | |||||||||||||||||||||
| Variable production costs: | |||||||||||||||||||||
| Direct materials | $ | 170 | |||||||||||||||||||
| Direct labor | 200 | ||||||||||||||||||||
| Variable factory overhead | 110 | ||||||||||||||||||||
| Fixed production costs: | |||||||||||||||||||||
| Depreciation (equipment) | 70 | ||||||||||||||||||||
| Factory rent | 98 | ||||||||||||||||||||
| Other | 22 | ||||||||||||||||||||
| Total production cost | $ | 670 | |||||||||||||||||||
| Variable selling & administrative costs | $ | 34 | per unit | ||||||||||||||||||
| Fixed selling & administrative costs | $ | 46 | per unit | ||||||||||||||||||
Given a normal selling price per unit of $800, what is the contribution margin per unit sold for recurring (i.e., normal) sales?
Multiple Choice
-
$486.
-
$466.
-
$426.
-
$286.
-
$630.
Homework Answers
Answer : $ 286
Contribution Margin Per Unit = Selling Price - Variable Cost Per Unit
Selling Price = $800
Variable Cost Per Unit = Direct Material + Direct Labor+ Variable overhead +Varailbe selling and Administrative Cost
Variable Cost Per Unit = 170+200+110+34 = $514
Contribution Margin Per Unit = 800-514 = $286 Per Unit
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