Kogler Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows:Average cost per unitDirect Materials $4.85Direct Labor $4.70Variable manufacturing overhead $1.65Fixed manufacturing overhead $10.00Fixed selling expense $3.45Fixed administrative expense $1.50Sales commissions $0.60Variable administrative expense $0.55If the selling price is $27.00 per unit, the contribution margin per unit sold is closest to:A: $17.45B: $0.30C: $14.65D: $5.80

Question

Business

Nayeli Burgess

19 March, 19:53

Kogler Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows:Average cost per unitDirect Materials $4.85Direct Labor $4.70Variable manufacturing overhead $1.65Fixed manufacturing overhead $10.00Fixed selling expense $3.45Fixed administrative expense $1.50Sales commissions $0.60Variable administrative expense $0.55If the selling price is $27.00 per unit, the contribution margin per unit sold is closest to:A: $17.45B: $0.30C: $14.65D: $5.80

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Janelle Zamora · Answer 1

Contribution margin per unit = $15.8

Explanation:

Giving the following information:

Direct Materials $4.85

Direct Labor $4.70

Variable manufacturing overhead $1.65

Selling price = $27

The contribution margin per unit is calculated by deducting from the selling price the direct material, direct labor, and variable overhead:

Contribution margin per unit = 27 - 4.85 - 4.7 - 1.65 = $15.8