Variable Cost, Fixed Cost, Contribution Margin Income Statement Chillmax Company plans to sell 3,500 pairs of casual shoes at $60 each in the coming year. Product costs include: Direct materials per pair 12 Direct labor per pair Variable factory overhead per pair Total fixed factory overhead 30,000 Variable selling expense is a commission of $3 per pair; fixed selling and administrative expense totals $48,000. Required: 1. Calculate the total variable cost per unit. 2. Calculate the total fixed expense for the year.

Instructions are listed below.

Explanation:

Giving the following information:

Product costs include:

Direct materials per pair 12

Direct labor per pair = 8 (invented)

Variable factory overhead per pair = 4 (invented)

Total fixed factory overhead 30,000

Variable selling expense is a commission of $3 per pair

fixed selling and administrative expense totaled $48,000.

1) Total variable cost = unitary cost * number of units

Unitary variable cost = direct material + direct labor + variable overhead

Unitary variable cost = 12 + 8 + 4 = 24

Total variable cost = 3,500*24 = $84,000

Variable selling expense is not part of the product cost.

2) Total fixed expense = fixed overhead + fixed selling and administrative expense

Total fixed expense = 30,000 + 48,000 = $78,000