Question
Variable Costs, Contribution Margin, Contribution Margin Ratio Super-Tees Company plans to sell 13,000 T-shirts at $24 each in the coming year. Product costs include: Direct
Variable Costs, Contribution Margin, Contribution Margin Ratio
Super-Tees Company plans to sell 13,000 T-shirts at $24 each in the coming year. Product costs include:
Direct materials per T-shirt | $8.40 |
Direct labor per T-shirt | $1.68 |
Variable overhead per T-shirt | $0.72 |
Total fixed factory overhead | $45,000 |
Variable selling expense is the redemption of a coupon, which averages $1.20 per T-shirt; fixed selling and administrative expenses total $13,000.
Required:
1. Calculate the following values: Round dollar amounts to the nearest cent and round ratio values to three decimal places (express the ratio as a decimal rather than a percentage).
a. Variable product cost per unit | $ |
b. Total variable cost per unit | $ |
c. Contribution margin per unit | $ |
d. Contribution margin ratio | |
e. Total fixed expense for the year | $ |
2. Prepare a contribution-margin-based income statement for Super-Tees Company for the coming year. If required, round your per unit answers to the nearest cent.
Super-Tees Company | ||
Contribution-Margin-Based Operating Income Statement | ||
For the Coming Year | ||
Total | Per Unit | |
$ | $ | |
$ | $ | |
$ |
3. What if the per unit selling expense increased from $1.20 to $2.55? Calculate new values for the following: Round dollar amounts to the nearest cent and round ratio values to four decimal places (express the ratio as a decimal rather than a percentage):
a. Variable product cost per unit | $ |
b. Total variable cost per unit | $ |
c. Contribution margin per unit | $ |
d. Contribution margin ratio | |
e. Total fixed expense for the year | $ |
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