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Calculate the contribution margin per unit

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Reference no: EM133188100

Question - Ontrack Company produces compasses for cross-country skiing. The production capacity is 45 000 compasses, and the company is currently operating at 85 per cent capacity. Variable manufacturing costs are $10 per unit. Fixed manufacturing costs are $425 000. The compasses are normally sold directly to Outdoor Tent City at $25 each. Ontrack has an offer from Neverlost Company (a foreign wholesaler) to purchase an additional 5000 compasses at $13 per unit.

Required -

a. Calculate the available production capacity.

b. Calculate the contribution margin per unit for both the current production of compasses and the special order compasses.

Reference no: EM133188100

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