Question

Intercontinental, Inc., provides you with the following data for its single product: 51.00 1,350,000 1,800,000 Sales price per unit Fixed costs (per month): Selling, general, and administrative (SG&A) Manufacturing overhead Variable costs (per unit): Direct labor Direct materials Manufacturing overhead SG&A Number of units produced per month 7.00 13.00 10.00 5.00 300,000 units Required: Compute the amounts for each of the following assuming that both production levels are intermediate calculations. Round your answers to 2 decimal places.) s 300,000 units 400,000 units C a. Prime cost per unit. b Contribution margin per unit. Gross margin per unit. d. Conversion cost per unit. e. Variable cost per unit. Full absorption cost per unit 9 Variable production cost per unit. h Full cost per unit

Answer 1

Answer :

		300000 unit	400000 unit
a	Prime cost per unit	$ 20	$ 20
b	Contribution margin per unit	$ 16	$ 16
c	Gross margin per unit	$ 15	$ 16.50
d	Conversion cost per unit	$ 23	$ 21.50
e	Variable cost per unit	$ 35	$ 35
f	Full absorption cost per unit	$ 36	$ 34.50
g	Variable production cost per unit	$ 30	$ 30
h	Full cost per unit	$ 45.50	$ 42.88

Calculation table

		Formula	300000 unit	400000 unit
a	Prime cost per unit	Direct material + Direct Labor	$ 13+ $ 7 = $ 20	$ 20
b	Contribution margin per unit	Sales - variable cost	$ 51- $ 7 - $ 13- $ 10 - $ 5 = $ 16	$ 16
c	Gross margin per unit	Sales - Cogs Cogs = Direct material + Direct labor + variable M oh + Fixed M.oh	$ 51- $ 36 = $ 15 Cogs = $ 13+ $ 7+ $ 10 + $ 1800000/ 300000 = $ 36	$ 51- $ 34.50 = $ 16.50 Cogs = $ 13+ $ 7+ $ 10 + $ 1800000/ 400000 = $ 34.50
d	Conversion cost per unit	Direct labor + Variable M.oh + Fixed M oh	$ 7 + $ 10+ $ 6 = $ 23	$ 7 + $ 10 + $ 4.50 = $ 21.50
e	Variable cost per unit	Direct labor + Direct material + M.oh + SG and A	$ 7 + $ 13+ $ 10 + $ 5 = $ 35	$ 35
f	Full absorption cost per unit	Direct material + Direct labor + variable M oh + Fixed M.oh	$ 13+ $ 7+ $ 10 + $ 1800000/ 300000 = $ 36	$ 13+ $ 7+ $ 10 + $ 1800000/ 400000 = $ 34.50
g	Variable production cost per unit	Direct material + Direct labor + variable M oh	$ 13+ $ 7+ $ 10 = $ 30	$ 13+ $ 7+ $ 10 = $ 30
h	Full cost per unit	Total variable cost per unit + Total fixed cost per unit	$ 35 +( $ 1350000+ $ 1800000 )/300000 = $ 35 + $ 10.50 = $ 45.50	$ 35 +( $ 1350000+ $ 1800000 )/400000 = $ 42.88 (Approx)