Oradell Company sells its single product at a price of $60 per unit and incurs the following variable costs per unit of product:
Direct material |
$16 |
|
Direct labor |
12 |
|
Manufacturing overhead |
7 |
|
|
||
Variable manufacturing costs |
$35 |
|
Selling expenses |
5 |
|
|
||
Total variable costs |
$40 |
|
|
Oradell’s annual fixed costs are $880,000, and Oradell is subject to a 30% income tax rate.
If prime costs increased by 20% and all other values remained the same, Oradell Company’s contribution margin (to the nearest whole percent) would be
A) 24%
B) 30%
C)20%
D) 76%
selling price per unit | 60 | |||||
Direct material (16*120%) | 19.2 | |||||
Direct labor (12*120%) | 14.4 | |||||
Manufacturing overhead | 7 | |||||
selling expense | 5 | |||||
total variable cost | 45.6 | |||||
contribution margin | 14.4 | |||||
contribution margin ratio =14.4/60 | ||||||
24% | ||||||
answer) | option A 24% | |||||
Oradell Company sells its single product at a price of $60 per unit and incurs the...
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