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

Answer 1

Answer:

Contribution margin per unit= $15.8

Explanation:

Giving the following information:

Direct Materials $4.85

Direct Labor $4.70

Variable manufacturing overhead $1.65

Selling price= $27

The contribution margin per unit is calculated by deducting from the selling price the direct material, direct labor, and variable overhead:

Contribution margin per unit= 27 - 4.85 - 4.7 - 1.65= $15.8