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dsp73
3 years ago
15

Given a normal selling price per unit of $750, what is the contribution margin per unit sold for recurring (i.e., normal) sales

Business
1 answer:
Usimov [2.4K]3 years ago
5 0

Answer:

$396

Explanation:

Calculation for the contribution margin per unit sold for recurring sales

Using this formula

Contribution margin per unit = Normal Selling price per unit - (Direct material +Direct labor+Variable factory overhead)-Variable selling & administrative costs

Let plug in the formula

Contribution margin per unit = $750 - ($120+ $150 + $60) - $24

Contribution margin per unit = $750 - $330 - $24

Contribution margin per unit= $396

Therefore the contribution margin per unit sold for recurring sales will be $396

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a. Activity rates for each activity

Fabrications   = $18/dlh

Assembly      = $7/dlh

Setup             = $450/setup

Inspection      = $230/inspection

b.  Activity-based factory overhead per unit for each product

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Bass boats  = $302.068

Explanation:

Provided there are various activities as follows

Activity               Cost                Speed Boats        Bass boats          Total activity

Fabrications    $522,000        7,250 dlh             21,750 dlh            29,000 dlh

Assembly        $182,000         19,500 dlh            6,500 dlh             26,000 dlh

Setup               $195,750         52 setups            383 setups           435 setups

Inspection         $166,750        91 inspections     634 inspections    725 inspt.

a. Activity rates for each activity

Fabrications   =   $522,000/29,000 dlh = $18/dlh

Assembly     =     $182,000/26,000 dlh   = $7/dlh

Setup           =      $195,750/435 setups = $450/setup

Inspection    =      $166,750/725 inspections = $230/inspection

b.  Activity-based factory overhead per unit for each product

Activity              Speed Boats                                     Bass boats    

Fabrications       7,250 x $18 = $130,500             21,750 X $ 18 = $391,500

Assembly           19,500 X $7 = $136,500             6,500 X $7 = $45,500

Setup                  52 X $450 = $23,400                383 X $450 = $172,350

Inspection           91 X $230 = $20,930                 634 X $230 = $145,820

Total of both                    = $311,330                              = $755,170

Total units are 2,500 of each product

Cost p.u.  = $311,330/2,500 =$124.532    = $755,170/2,500 =$302.068

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Fabrications   = $18/dlh

Assembly      = $7/dlh

Setup             = $450/setup

Inspection      = $230/inspection

b.  Activity-based factory overhead per unit for each product

Speed Boats = $124.532

Bass boats  = $302.068

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