Question

Ace, Inc. has the following cost data for Product X, and unit product cost using variable costing when production is 2,000 units, 2,500 units, and 5,000 units. (Click on the icon to view the data.) (Click on the icon to view the unit product cost data.) Product X sells for $162 per unit. Assume no beginning inventories. Calculate the contribution margin using variable costing when Ace: a. Produces and sells 2,000 units. b. Produces 2,500 units and sells 2,000 units. c. Produces 5,000 units and sells 2,000 units. Reference X Data Table SUU OT Direct materials Direct materials 2,000 units 2,500 units 5,000 units 44 $ 44 $ 44 52 52 52 Direct labor Direct labor 44 52 11 20,000 per unit per unit per unit per year 11 Variable manufacturing overhead Variable manufacturing overhead Fixed manufacturing overhead $ 107 $ 107 $ 107 Total unit product cost Print Done Print Done

Answer 1

Calculate contribution margin

	a	b	c
Net Sales revenue	2000*162 = 324000	324000	324000
Total Variable cost	2000*107 = 214000	214000	214000
Contribution margin	110000	110000	110000