Carr Company produces a single product. During the past year, Carr manufactured
ID: 2446002 • Letter: C
Question
Carr Company produces a single product. During the past year, Carr manufactured 32,900 units and sold 27,500 units. Production costs for the year were as follows: Fixed manufacturing overhead $592,200 Variable manufacturing overhead $289,520 Direct labor $171,080 Direct materials $253,330 Sales totaled $1,168,750, variable selling expenses totaled $148,500, and fixed selling and administrative expenses totaled $227,010. There were no units in beginning inventory. Assume that direct labor is a variable cost. The contribution margin per unit would be: (Do not round intermediate calculations.)
Explanation / Answer
Contribution margin per unit = Sale/No of unit sold - (Direct materials + Direct labor + Variable manufacturing overhead)/No of Unit Produced - variable selling expenses/No of unit sold
Contribution margin per unit = 1168750/27500 - (253330+171080 + 289520)/32900 - 148500/27500
Contribution margin per unit = 42.50 - 21.70 - 5.40
Contribution margin per unit = $ 15.40