Reference no: EM132438228
Question - Variable Costs, Contribution Margin, Contribution Margin Ratio
Super-Tees Company plans to sell 18,000 T-shirts at $22 each in the coming year. Product costs include:
Direct materials per T-shirt
|
$7.70
|
Direct labor per T-shirt
|
$1.54
|
Variable overhead per T-shirt
|
$0.66
|
Total fixed factory overhead
|
$39,000
|
Variable selling expense is the redemption of a coupon, which averages $1.10 per T-shirt; fixed selling and administrative expenses total $11,000.
Required -
1. Calculate the following values:
a. Variable product cost per unit
b. Total variable cost per unit
c. Contribution margin per unit
d. Contribution margin ratio
e. Total fixed expense for the year
2. Prepare a contribution-margin-based income statement for Super-Tees Company for the coming year. If required, round your per unit answers to the nearest cent.
3. What If the per unit selling expense Increased from $1.10 to $2.35? Calculate new values for the following:
a. Variable product cost per unit
b. Total variable cost per unit
c. Contribution margin per unit
d. Contribution margin ratio
e. Total fixed expense for the year.