Question

Macy Corporation's relevant range of activity is 3,300 units to 8,500 units. When it produces and sells 5,900 units, its average costs per unit are as follows:

	Average Cost per Unit
Direct materials	$	4.70
Direct labor	$	3.15
Variable manufacturing overhead	$	1.15
Fixed manufacturing overhead	$	4.30
Fixed selling expense	$	1.10
Fixed administrative expense	$	0.65
Sales commissions	$	1.05
Variable administrative expense	$	0.55

If the selling price is $24.00 per unit, the contribution margin per unit sold is closest to:

Answer 1

Ans:

If the selling price is $24.00 per unit, the contribution margin per unit sold is closest to:

Particulars		Contribution Margin per unit (selling price – variable cost)
Selling price per unit        A	$	24.00
Direct materials	$	4.70
Direct labor	$	3.15
Variable manufacturing overhead	$	1.15
Sales commissions	$	1.05
Variable administrative expense	$	0.55
Total variable cost per unit     B	$	10.6
Contribution margin per unit (A-B)	$	13.4

So the contribution margin per unit sold is closest to $13.4