Which factor of production controls and gives direction processes?
2 answers:
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Answer:
Contribution margin for 6,300 units = $229,950
Explanation:
Since change in activity level is given,
We can compute the fixed and variable cost per unit
Change in cost of sales = $580,300 - $497,400 = $82,900
Change in activity = 7,000 - 6,000 = 1,000 units
Thus, variable cost of sales per unit = $82,900/1,000 = $82.90
Therefore, fixed cost = $580,300 - ($82.90 7,000) = $580,300 - $580,300
= $0
Thus, there is no fixed cost in this, it is complete variable.
Moving to selling and administration expenses
Change in cost = $294,700 - $273,600 = $21,100
Change in activity level = 7,000 - 6,000 = 1,000 units
Cost per unit variable = $21,100/1,000 = $21.10
Fixed Cost = $273,600 - ($21.10 6,000) = $273,600 - $126,600. = $147,000
Therefore, variable cost per unit = $82.90 + $21.10 = $104
Selling price per unit = $140.50
Contribution per unit = $140,50 - $104 = $36.50
Contribution margin for 6,300 units = $36.50 6,300 = $229,950