Ramort Company reports the following cost data for its single product. The company regularly sells 20,000 units of its product at a price of $60 per unit. Direct materials $ 10 per unit Direct labor $ 12 per unit Overhead costs for the year Variable overhead $ 3 per unit Fixed overhead per year $ 40,000 Selling and adminstrative costs for the year Variable $ 2 per unit Fixed $ 65,200 Normal production level (in units) 20,000 units Compute contribution margin under variable costing.

Question

Business

Dennis Bowman

20 July, 19:35

Ramort Company reports the following cost data for its single product. The company regularly sells 20,000 units of its product at a price of $60 per unit. Direct materials $ 10 per unit Direct labor $ 12 per unit Overhead costs for the year Variable overhead $ 3 per unit Fixed overhead per year $ 40,000 Selling and adminstrative costs for the year Variable $ 2 per unit Fixed $ 65,200 Normal production level (in units) 20,000 units Compute contribution margin under variable costing.

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Olivia Johnston · Answer 1

Contribution margin per unit = $33

Explanation:

Giving the following information:

The company regularly sells 20,000 units of its product for $60 per unit.

Direct materials $ 10 per unit

Direct labor $ 12 per unit

Overhead costs for the year Variable overhead $ 3 per unit

Fixed overhead per year $ 40,000

Selling and administrative costs:

Variable $ 2 per unit

Fixed $ 65,200

Normal production level = 20,000 units

Contribution margin = Selling price - unitary variable costs

Unitary variable cost = direct materials + direct labor + variable manufacturing overhead + variable selling and administrative

Unitary variable cost = 10 + 12 + 3 + 2 = $27

Contribution margin per unit = 60 - 27 = $33