Question

Ramort Company reports the following cost data for its single product. The company regularly sells 20,000 units of its product at a price of $60 per unit. Direct materials $ 10 per unit Direct labor $ 12 per unit Overhead costs for the year Variable overhead $ 3 per unit Fixed overhead per year $ 40,000 Selling and adminstrative costs for the year Variable $ 2 per unit Fixed $ 65,200 Normal production level (in units) 20,000 units Compute contribution margin under variable costing.

Answer 1

Answer:

Contribution margin per unit= $33

Explanation:

Giving the following information:

The company regularly sells 20,000 units of its product for $60 per unit.

Direct materials $ 10 per unit

Direct labor $ 12 per unit

Overhead costs for the year Variable overhead $ 3 per unit

Fixed overhead per year $ 40,000

Selling and administrative costs:

Variable $ 2 per unit

Fixed $ 65,200

Normal production level= 20,000 units

Contribution margin= Selling price - unitary variable costs

Unitary variable cost= direct materials + direct labor + variable manufacturing overhead + variable selling and administrative

Unitary variable cost= 10 + 12 + 3 + 2= $27

Contribution margin per unit= 60 - 27= $33