Question
Music Plus Company plans to sell 802 pianos at $14,500 per piano in the coming year. Product costs include: Direct materials per piano $3,150 Direct
Music Plus Company plans to sell 802 pianos at $14,500 per piano in the coming year.
Product costs include:
Direct materials per piano $3,150
Direct labor per piano $4,268
Variable overhead per piano $1,746
Total fixed factory overhead $176,805
Variable selling expense is $1,057 per piano.
Fixed selling and administrative expenses total $112,908.
Part 1 Calculate the:
a. Variable product cost per unit.
b. Total variable cost per unit.
c. Contribution margin per unit.
d. Contribution margin ratio (round to two decimal places).
e. Total fixed expense for the year.
Part 2
Prepare a contribution-margin-based income statement for Music Plus Company for the coming year.
Part 3 Assume the per unit selling expense increases from $1,057 to $1,802 per piano.
Recalculate the following:
a. Variable product cost per unit.
b. Total variable cost per unit.
c. Contribution margin per unit.
d. Contribution margin ratio (round to two decimal places).
e. Total fixed expense for the year.
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