Question

The following cost information pertained to the Violin Division of Stringing Music Co. and was based on monthly demand and sales of 200 units: Per-Unit Costs Variable production costs: Direct materials $170 Direct labor 155 Variable factory overhead 75 Fixed production costs: Depreciation (equipment) 15 Factory rent 58 Other 15 Total production cost $488 Variable selling

Answer 1

The contribution margin per unit sold by Violin Division of Stringing Music Co is $326.

What is the contribution margin per unit?

The contribution margin per unit is the difference between the selling price per unit and the total variable costs (production and selling) per unit.

Data and Calculations:

Monthly demand and sales = 200 units

Per-Unit Costs

Variable production costs:

Direct materials $170

Direct labor 155

Variable factory overhead 75

Fixed production costs:

Depreciation (equipment) 15

Factory rent 58

Other 15

Total production cost = $488

Variable selling = $24

Fixed selling & administrative costs = $36 per unit

Selling price per unit = $750

Total variable cost per unit:

Direct materials                $170

Direct labor                        155

Variable factory overhead 75

Variable selling                   24

Total variable production and selling costs = $424

Selling price per unit = $750

Contribution margin per unit = $326 ($750 = $424)

Thus, the contribution margin per unit sold is $326.

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Question Completion:

Variable selling & administrative costs $24 per unit Fixed selling & administrative costs $36 per unit Given a normal selling price per unit of $750, what is the contribution margin per unit sold