50.1K

Verified Solution

Link Copied!

Variable Costs, Contribution Margin, Contribution Margin Ratio Super-Tees Company plans to sell 10,000 T-shirts at $16 each in the coming year. Product costs include: Direct materials per T-shirt $5.60 Direct labor per T-shirt $1.12 Vanable overhead per T-shirt $0.48 Total fixed factory overhead $40,000 Variable selling expense is the redemption of a coupon, which averages $0.80 per T-shirt; fixed selling and administrative expenses total $19,000. 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. Vanable product cost per unit b. Total variable cost per unit Contribution margin per unit d. Contribution margin ratio e Total fixed expense for the year 59,000 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 Sales 160,000 16 Total variable expense 3.200 X 32X Total contribution margin 76.800 X 7.68 X Total fixed expense 59.000 Operating income 17.800 X Feedba Check My Work Remember a contribution margin income statement calculates contribution margin not gross profit 3. What if the per unit selling expense increased from $0.80 to $1.757 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 Food Check My W 0.8. b. Remember there is a difference between Variable product cost per unit and total variable cost per unit Contribution Margin per unit is Price - Variable Cost per unit d. The calculation of contribution margin ratio uses total variable cost per unit not variable product cost per unit c. Fixed expenses don't increase as units increase

Answer & Explanation Solved by verified expert

See Answer