Question

Eley Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows Direct meterials Direct labor Varlable manufacturing overhead Fixed manufacturing overhead Varlable selling& administrative expense Fixed selling & adminlstrative expense 581 $ 16.1 $ 1.3 $ 25.6 $ 17 $ 17.3 The normal selling price of the product is $125.8 per unit. An order has been received from an overseas customer for 1,350 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.1 less per unit on this order than on normal sales. Direct labor is a variable cost in this company What is the contribution margin per unit on normal sales? O $4860 O $1640 O $1760 O $15.30

Answer 1

Option A is the answer

Contribution Margin = Sales revenue - Variable costs

= 125.8 - (58.1+16.1+1.3+1.7)

= 125.8 - 77.2

= 48.6