Assignment Task: Variable Costs, Contribution Margin, Contribution Margin Ratio
Super-Tees Company plans to sell 18,000 T-shirts at $22 each in the coming year. Product costs include:
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Direct materials per T-shirt
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$7.70
|
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Direct labor per T-shirt
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$1.54
|
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Variable overhead per T-shirt
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$0.66
|
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Total fixed factory overhead
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$39,000
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Variable selling expense is the redemption of a coupon, which averages $1.10 per T-shirt; fixed selling and administrative expenses total $11,000.
Required:
Question 1: Calculate the following values:
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
Question 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.
Question 3: What If the per unit selling expense Increased from $1.10 to $2.35? Calculate new values for the following:
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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