Variable Cost Particulars Calculation of Fixed Costs @ 300,000 units Direct Material $ 0.80 per unit Total Fixed Cost $ 990,000 Direct Labor ($10 per hour, each worker can make 20 units in an hour) $ 0.50 per hour Add Inflation: 10% increase $ Shipping Packaging Power, Supplies, indirect labor, & other variable production costs Commissions to sales staff (10% of retail) Total Variable Cost $ 0.75 per unit Total Fixed Cost 99,000 $ 1,089,000 $ 1.20 per unit $ 0.80 per unit $ 0.50 per unit Sale Price per unit Contribution Margin per unit $ 8.00 $ 4.55 per unit Less: Total Variable Cost per $ Contribution per unit 4.55 $ 3.45 Fixed Cost Particulars Administrative staff salaries, depreciation on office equipment $ 0.90 per unit Contribution Margin % Supervisory salaries, equipment rental, and misc production costs Advertising & promotion $ 1.80 per unit Sale Price per unit $ 8.00 $ 0.60 per unit Contribution per unit $ 3.45 Total Fixed Cost $ 3.30 per unit Contribution Margin % 43.13%