Question

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Required information (The following information applies to the questions displayed below.) Phillips Company manufactures air-conditioning units for commercial buildings and has noticed considerable variation in shipping expenses from month to month as per the data below: Units Shipped 4 Month January February March April May June July 5 2 3 6 8 Total Shipping Expense $ 2,200 $ 3,100 $ 2,600 $ 1,500 $ 2,200 $3,000 $ 3,600 8. If the air conditioners have an average sales price of $5,000, variable direct manufacturing costs are $2,500 per unit, variable manufacturing overhead costs are $500 per unit, and variable selling and administration costs (excluding shipping) are $200 per unit, what is the contribution margin per unit? Contribution margin per unit

Answer 1

Phillips Company
Variable cost per unit (Shipping) = ($3600-1500) / (8-2) = $350 per unit

8.
Contribution Margin per unit = Selling Price - Variable Cost per unit
= $5000 - (2500+500+350+200) = $1450 per unit

9.
Total Contribution Margin = 7 x $1450 = $10,150

Brentline Hospital
1.
Variable Cost per unit = ($70530-48570) / (5400-3600) = $12.20 per unit
Fixed Cost = $70530 - 5400 x 12.2 = $4650

y = $4650 + $12.20 X

2.
Variable Cost = $53802 i.e. 4410 x $12.20
Fixed Cost = $4650
Total Cost = $58452

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