Reference no: EM132649358

Sheridan Company produces a molded briefcase that is distributed to luggage stores. The following operating data for the current year has been accumulated for planning purposes.

Sales price  $34

Variable cost of goods sold 10

Variable selling expenses  9.0

Variable administrative expenses 3

Annual fixed expenses Overhead $7,176,000

Selling expenses 1,518,000

Administrative expenses 2,898,000

• Sheridan can produce 1.38 million cases a year. The projected net income for the coming year is expected to be $1.66 million. Sheridan is subject to a 40% income tax rate.
• During the planning sessions, Sheridan's managers have been reviewing costs and expenses. They estimate that the company's variable cost of goods sold will increase 15% in the coming year and that fixed administrative expenses will increase by $138,000. All other costs and expenses are expected to remain the same.

Problem 1: Calculate contribution margin per unit for the coming year. (Round contribution margin per unit to 2 decimal places, e.g. 0.38.)