Question

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 $ 4.80

Direct labor $ 4.60

Variable manufacturing overhead $ 1.60

Fixed manufacturing overhead $ 9.00

Fixed selling expense $ 3.40

Fixed administrative expense $ 1.40

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?

• $13.05

• ($0.75)

• $5.00

• $15.60

Answer 1

Answer = $13.05 - Option - A

I B C 1 Calculation of Contribution margin per unit 2 Selling Price $ 25.00 3 Less: Variable Cost 4. Direct materials $ 4.80 5 Direct Labour $ 4.60 6 Variable manufacturing overhead $ 1.60 7 Sales commissions $ 0.50 8 Variable administrative expense | $ 0.45 9 Total Variable cost $ 11.95 10 Contribution margin $ 13.05 11

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