Question

Paney Company makes calendars. Information on cost per unit is as follows: Direct materials $1.50 Direct labor 1.20 Variable overhead 0.90 Variable marketing expense 0.40 Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10. What is the contribution margin per unit? a.$5.00 b.$6.00 c.$5.40 d.$6.40 e.$6.30

Answer 1

b.$6.00

Step-by-step explanation:

The contribution margin is the difference between the sales and variable cost. The difference between the unit sales and unit variable cost thus gives the contribution margin per unit.

Total variable cost per unit includes both direct and indirect cost.

variable cost per unit = $1.50 + $1.20 + 0.90 + 0.40

= $4.00

contribution margin per unit

= $10.00 - $4.00

= $6.00