Homework SourseMacy Corporations relevant range of activity is 8700 units t
Macy Corporation\'s relevant range of activity is 8,700 units to 17,500 units. When it produces and sells 13,100 units, its average costs per unit are as follows:
If the selling price is $33.00 per unit, the contribution margin per unit sold is closest to:
Multiple Choice
$11.70
$7.50
$23.35
$19.45
| Average Cost per Unit | ||
| Direct materials | $ | 5.60 |
| Direct labor | $ | 4.05 |
| Variable manufacturing overhead | $ | 2.05 |
| Fixed manufacturing overhead | $ | 3.80 |
| Fixed selling expense | $ | 1.35 |
| Fixed administrative expense | $ | 0.65 |
| Sales commissions | $ | 1.30 |
| Variable administrative expense | $ | 0.55 |
Solution
Answer:
the contribution margin per unit sold is closest to:$19.45
Working notes for the above answer is as under
First we need to find out the total variable cost as under
Average Cost
per Unit
Direct materials
5.6
Direct labor
4.05
Variable manufacturing overhead
2.05
Sales commissions
1.3
Variable administrative expense
0.55
Total Variable cost
13.55
Sales
33
Less: variable cost
13.55
Contribution margin
19.45
| Average Cost | |
| Direct materials | 5.6 |
| Direct labor | 4.05 |
| Variable manufacturing overhead | 2.05 |
| Sales commissions | 1.3 |
| Variable administrative expense | 0.55 |
| Total Variable cost | 13.55 |
