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 9,170 units of Fluoro2211 are as follows.
Per Unit Data | ||||
Selling Price | $ | 490 | ||
Direct Materials | 190 | |||
Direct Labor | 32 | |||
Variable Manufacturing Overhead | 29 | |||
Fixed Manufacturing Overhead | 47 | |||
Variable Selling | 20 | |||
Fixed Selling and Administrative | 27 | |||
Total Costs | 345 | |||
Operating Margin | $ | 145 | ||
During the next year, sales of Fluoro2211 are expected to be 10,170 units. All costs will remain the same except for fixed manufacturing overhead, which will increase by 20%, and direct materials, which will increase by 10%. The selling price per unit for next year will be $500. Based on these data, Razor Inc.'s total contribution margin for next year will be: (CMA adapted)
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