Question
Razor Inc. manufactures industrial components. One of its products used as a subcomponent in auto manufacturing is Fluoro2211. The selling price and cost per unit
Razor Inc. manufactures industrial 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 Fluoro2211 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)
$882,000.
$980,000.
$972,000.
$1,080,000.
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