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pantera1 [17]
2 years ago
11

Cool Fan Company sells 10,000 units to wholesalers each year at $60 per unit. The materials cost $10 per fan and unit labor cost

is $15. The total promotion and marketing costs are $100,000. The facility expenses are $80,000 per year and other overheads cost $20,000. What is the unit contribution of each fan?a. $ 150,000
b. $ 200,000
c. $ 250,000
d. $ 300,000
e. $ 350,000
Business
1 answer:
eimsori [14]2 years ago
8 0

Answer:

e. $ 350,000

Explanation:

Given: Total number of units= 10000.

           Selling price= $60 per unit.

           The material cost= $10 per fan

           Labor cost= $15 per unit.

           Promotion and marketing cost= $100000.

           Facility expense= $80000.

           Other overhead cost= $20,000.

Now, finding the variable cost of fan.

Variable cost= Total\ material\ cost + Labor\ cost

Variable cost= (\$ 10\times 10000+ \$ 15 \times  10000)

⇒ Variable cost= \$ 100000+\$ 150000= \$ 250000

∴ Variable cost= $250000.

Selling price= (\$ 60\times 10000)= \$ 600000

∴ Selling price of fan is $600000.

Unit contribution= (selling\ price - variable\ cost)

Next find the unit contribution of each fan.

⇒ Unit contribution=  (\$ 600000 - \$ 250000)

∴ Unit contribution of each fan is $350000.

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