Macy Corporation's relevant range of activity is 8,700 units to 17,500 units. When it produces and sells 13,100 units, its average costs per unit are as follows:

Average Cost per Unit

Direct materials $5.6

Direct labor $4.05

Variable manufacturing overhead $2.05

Fixed manufacturing overhead $3.8

Fixed selling expense $1.35

Fixed administrative expense $0.65

Sales commissions $1.3

Variable administrative expense $0.55

If the selling price is $33.00 per unit, the contribution margin per unit sold is closest to:

a. $11.70

b. $7.50

c. $23.35

d. $19.45

Question

Adams

Business

2 February, 12:31

Macy Corporation's relevant range of activity is 8,700 units to 17,500 units. When it produces and sells 13,100 units, its average costs per unit are as follows:

Average Cost per Unit

Direct materials $5.6

Direct labor $4.05

Variable manufacturing overhead $2.05

Fixed manufacturing overhead $3.8

Fixed selling expense $1.35

Fixed administrative expense $0.65

Sales commissions $1.3

Variable administrative expense $0.55

If the selling price is $33.00 per unit, the contribution margin per unit sold is closest to:

a. $11.70

b. $7.50

c. $23.35

d. $19.45

+3

Answers (1)

Know the Answer?

Azaria Ritter · Answer 1

Contribution margin = $19.45

Explanation:

solution

we get here first total Variable cost that is express as

total Variable cost = Direct materials + Direct labor + Variable manufacturing overhead + Sales commissions + Variable administrative expense ... 1

put here value we get

total Variable cost = 5.6 + 4.05 + 2.05 + 1.3 + 0.55

total Variable cost = $13.55

so now we get

Contribution margin that is

Contribution margin = Sales - total Variable cost ... 2

Contribution margin = 33 - 13.55

Contribution margin = $19.45