Question

Diamond Boot Factory normally sells their specialty boots for $375 a pair. An offer to buy 100 boots for $275 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $250 and special stitching will add another $20 per pair to the cost. Determine the differential income or loss per pair of boots from selling to the organization. $

Answer 1

Answer:

Unitary contribution margin= $5 increase

Explanation:

Giving the following information:

Selling price= $275 per pair

The variable cost per boot is $250 and special stitching will add another $20 per pair to the cost.

To calculate the effect on income for each boot, we need to calculate the unitary contribution margin.

Unitary contribution margin= selling price - unitary variable cost

Unitary contribution margin= 275 - (250 + 20)

Unitary contribution margin= $5