Reference no: EM132667851

Razor Inc. manufactures industrial components. One of its products
used as a subcomponent in auto manufacturing is Fluoro2211. The selling price and cost per unit data for 9,000 units of Fluoro2211 are as follows.

Per Unit Data

Selling Price$150

Direct Materials 20

Direct Labor 15

Variable Manufacturing Overhead 12

Fixed Manufacturing Overhead 30

Variable Selling 3

Fixed Selling and Administrative 10

Total Costs 90

Operating Margin $60

Problem 1: During the next year, sales of Fluoro2211 are expected to be 10,000 units. All costs will remain the same except for fixed manufacturing overhead, which will increase by 20%, and material, which will increase by 10%. The selling price per unit for next year will be $160. Based on these data, Razor Inc.'s total contribution margin for next year will be:

Group of answer choices

Option 1: $882,000.

Option 2: $980,000.

Option 3: $972,000.

Option 4: $1,080,000.