Question

Kogler Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows:
Average cost per unit

Direct Materials $4.85
Direct Labor $4.70
Variable manufacturing overhead $1.65
Fixed manufacturing overhead $10.00
Fixed selling expense $3.45
Fixed administrative expense $1.50
Sales commissions $0.60
Variable administrative expense $0.55
If the selling price is $27.00 per unit, the contribution margin per unit sold is closest to:
A: $17.45
B: $0.30
C: $14.65
D: $5.80

Answer 1

Answer:

the contribution margin is $14.65

Explanation:

The computation of the contribution margin is shown below:

As we know that

Contribution Margin per unit = Selling price per unit - Variable costs per unit

= ($27) - ($4.85 + $4.70 + $1.65 + $0.60 + $0.55)

= $27 - $12.35

= $14.65

Hence, the contribution margin is $14.65