Question
Razor Inc. Manufactures indistrial components. One of its products used as a subcomponent in auto manufacturing is Fluoro2211. The selling price and cost per unit
Razor Inc. Manufactures indistrial components. One of its products used as a subcomponent in auto manufacturing is Fluoro2211. The selling price and cost per unit data for 9,000 units of Fluoro2211 are as follows:
Per Unit Data
Selling Price $150
Direct Materials 20
Direct Labor 15
Variable Manufacturing Overhead 12
Fixed Manufacturing Overhead 30
Variable Selling 3
Fixed Selling and Administrative 10
Total Costs 90
Operating Margin $60
During the next year, sales of Flyoro211 are expected to be 10,000 units. All costs will remain the same except for fixed manufacturing overhead, which will increase by 20%, and material, which will increase by 10%. The selling price per unit for next year will be $160. Based on these data, Razor Inc's total contribution margin for next year will be: (CMA adapted) A) $1,080,000. B) $882,000. C) $972,000. D) $980,000.
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