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
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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