html 690 390 Direct labor 23200 Sales commissions 100 7600 7

html $6.90 $3.90 Direct labor $23,200 Sales commissions $1.00 7,600 $700 $13.00

FOR SOLVING THIS QUESTIONS YOU FIRST HAVE TO KNOW WHAT IS VARIABLE COST

Variable Cost-- In simple word it is the cost which changes with change in production.

e.g-Direct material which changes with change in production.

-Direct labour , sales commission, freight out etc all these are variable cost and affected by production.

FORMULA- Selling price per unit - Variable cost per unit = Contribution per unit.

Solving question

1st step- Calculate Total Variable cost

Direct material+Direct labour+Variable manufacturing overhead+Sales Commission+Variable Administrative expenses =$13.90

2nd Step - Now Subtract Total variable Cost from Selling Price per unit.

$26.90 - $13.90= $13.00

Hence, 2nd option is right.