Question
Selling price per unit (package of 2 CDs)...................................... $24.00 Variable costs per unit: Direct material............................................................................................................... $5.50 Direct labor...................................................................................................................... $4.50 Artist's royalties.............................................................................................................. $4.00 Manufacturing overhead.......................................................................................... $3.00
Selling price per unit (package of 2 CDs)......................................
$24.00
Variable costs per unit:
Direct material...............................................................................................................
$5.50
Direct labor......................................................................................................................
$4.50
Artist's royalties..............................................................................................................
$4.00
Manufacturing overhead..........................................................................................
$3.00
Selling expenses............................................................................................................
$1.10
Total variable costs per unit............................................................
$18.10
Annual fixed costs:
Manufacturing overhead..........................................................................................
$186,000
Selling and administrative.......................................................................................
$260,000
Total fixed costs................................................................................
$446,000
Forecasted annual sales volume (120,000 units).........................
$2,880,000
What is the company's contribution margin ratio (CM ratio)?
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