Question

Kogler Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and...

Kogler Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows:

Average
Cost per Unit
Direct materials $ 4.85
Direct labor $ 4.20
Variable manufacturing overhead $ 1.55
Fixed manufacturing overhead $ 9.00
Fixed selling expense $ 3.15
Fixed administrative expense $ 1.80
Sales commissions $ 0.50
Variable administrative expense $ 0.45

If the selling price is $25.00 per unit, the contribution margin per unit sold is closest to:

Multiple Choice

  • $13.45

  • ($0.50)

  • $5.40

  • $15.95

0 0
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Answer #1

Answer is $13.45

Variable cost per unit = Direct materials per unit + Direct labor per unit + Variable manufacturing overhead per unit + Sales commissions per unit + Variable administrative expense per unit
Variable cost per unit = $4.85 + $4.20 + $1.55 + $0.50 + $0.45
Variable cost per unit = $11.55

Contribution margin per unit = Selling price per unit - Variable cost per unit
Contribution margin per unit = $25.00 - $11.55
Contribution margin per unit = $13.45

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