Amount Descriptions

Calculations

Instructions

Suppose that Larimer Company sells a product for $$19.$ Unit costs are as follows:

Direct materials

Direct labor

Variable factory overhead

Variable selling and administrative expense

$$2\mathrm{.}05$

$1\mathrm{.}45$

$2\mathrm{.}20$

$1\mathrm{.}14$

Total fixed factory overhead is $$47,816$ per year, and total fixed selling and administrative expense is $$38,520.$

Required:

Calculate the variable cost per unit and the contribution margin per unit.

Calculate the contribution margin ratio and the variable cost ratio.