Question

Amount Descriptions Calculations Contribution Margin Income Statement Instructions Suppose that Larimer Company sells a product for $20. Unit costs are as follows: Direct materials $1.70 Direct labor 1.60 Variable factory overhead Variable selling and administrative expense 2.00 1.50 Total fixed factory overhead is $55,240 per year, and total fixed selling and administrative expense is $38,480. Required: 1. Calculate the variable cost per unit and the contribution margin per unit. 2. Calculate the contribution margin ratio and the variable cost ratio. 3. Calculate the break-even units. 4. Prepare a contribution margin income statement at the break-even number of units. Enter all amounts as positive numbers.

Answer 1

rate positively .. let me know if you need any clarification..

Given that-
	Selling price per unit =		20
	direct material		1.7
	Direct labor		1.6
	Variable factory overhead		2
	variable selling and administrative overhead		1.5
	Total variable cost per unit		6.8
	Fixed cost
	Factory overhead		55240
	selling and administrative overhead		38480
	total fixed cost		93720
ans 1)	Unit variable cost =		6.80
	Unit contribution margin = 20-6.8		13.20
ans 2)	Contribution margin ratio = 13.2/20		66.00%
	Variable cost ratio= Variable cost /Sales =6.8/20		34.00%
ans 3)	Break even unit = Fixed cost/Contribution margin per unit		7100
	93720/13.2
ans 4)	Contribution margin statemenet
	Sales	7100*20	142000
	Varible cost	7100*6.8	48280
	Total contribution margin		93720
	fixed cost		93720
	Operating income		0