Question

Schwiesow Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 7.05 Direct labor $ 3.50 Variable manufacturing overhead $ 1.65 Fixed manufacturing overhead $ 11,000 Sales commissions $ 1.00 Variable administrative expense $ 0.40 Fixed selling and administrative expense $ 5,500 If the selling price is $18.70 per unit, the contribution margin per unit sold is closest to:

Answer 1

Answer:

The contribution margin per unit is $5.1

Explanation:

The contribution margin per unit is the amount from selling price per unit after deducting all the related variable costs per unit. This is the amount that each product contributes towards covering the fixed costs.

Contribution margin per unit:

Selling price per unit                              18.7

Less : Variable cost per unit

Direct material                                       (7.05)

Direct labor                                             (3.5)

Variable manufacturing Overhead       (1.65)

Sales commission                                  (1.00)

Variable Admin expense                      (0.40)

Contribution margin per unit                  5.1