Question
CAT Co. is a manufacturer of industrial components. One of their products that is used as a subcomponent in auto manufacturing is OM-12. This product
CAT Co. is a manufacturer of industrial components. One of their products that is used as a subcomponent in auto manufacturing is OM-12. This product has the following financial structure per unit:
Selling price $150
Direct materials $ 20
Direct labor 15
Variable manufacturing overhead 12
Fixed manufacturing overhead 30
Shipping and handling 3
Fixed selling and administrative10
Total costs $ 90
Q: During the next year, OM-12 sales are expected to be 10,000 units. All of the costs will remain the same except that fixed manufacturing overhead will increase by 20% and direct materials will increase by 10%. The selling price per unit for next year will be $160. Based on this data, the contribution margin from KB-96 for next year will be
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