Question

Variable Costs, Contribution Margin, Contribution Margin Ratio Super-Tees Company plans to sell 14,000 T-shirts at $18 each in the coming year. Product costs include: $6.30 $1.26 Direct materials per T-shirt Direct labor per T-shirt Variable overhead per T-shirt Total fixed factory overhead $0.54 $43,000 Variable selling expense is the redemption of a coupon, which averages $0.90 per T-shirt; fixed selling and administrative expenses total $18,000. Required: 1. Calculate the following values: Round dollar amounts to the nearest cent and round ratio values to three decimal places (express the ratio as a decimal rather than a percentage). a. Variable product cost per unit b. Total variable cost per unit C. Contribution margin per unit d. Contribution margin ratio e. Total fixed expense for the year

Answer 1

- a variable product cost per unit & [ 8.10] 6. Total variable cost per unit $ $9 s a e contribution margin perunit d. contribution margin Ratio 10.50] e. Total fined eapense for the year ar 61000 Super _Tees Company contribution Margin Based operating Income statemet 1. for the coming year Total Sales (14,00u Ishingt) Perunit 9252000 1918 variable cost $125,000 $9 contribution margin 61,000 12 000 Fined cost operating profit 65000

$6.30 1. (a) variable product cost per unit Direct Material per To seicot Direct labor per T- shirt Variable overhead per T- shirt. variable product cost 91.26 40.54 8.10 1.00 Total variable cost = variable Product cost + variable selling and administrative olH 8.10 + $0.9. $9 per unit . (6) Contribution Margin perunit= sales - Variable cost $18-9 -19 contribution margin isales confitution Margin Ratio = . -10.503 ce Total fired expenses for the year= Total fixed factory ght selling and administrative of $43000+ slow : 1361000)

] [8.10 & To,os 3.elvariable product cost pronit o Total variable cost per unit C 8.10+ 1:95) (6) Contributions Margin perunit [ 18- 10,05) (d) contributien margin Ratio $17.95 4 (6-9447 6.44 17 ces Total Firseel expense for the year $[61000