Question

Super-Tees Company plans to sell 18,000 T-shirts at $22 each in the coming year. Product costs include:

Direct materials per T-shirt	$7.70
Direct labor per T-shirt	$1.54
Variable overhead per T-shirt	$0.66
Total fixed factory overhead	$44,000

Variable selling expense is the redemption of a coupon, which averages $1.10 per T-shirt; fixed selling and administrative expenses total $15,000.

. 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).

Variable product cost per unit _____
Total variable cost per unit _____
Contribution margin per unit _____
Contribution margin ratio ______
Total fixed expense for the year _____

Answer 1

Answer:

We have to determine the following cases,

S.No	Particulars	Formula	Calculations	Amount($)
1	Variable product cost per unit	Direct material + Direct labor + Variable manufacturing overhead	7.70+1.54+0.66	9.9
2	Total variable cost per unit	Variable product cost + Variable selling expenses	9.9+1.10	11
3	Contribution margin per unit	Selling price - Variable cost per unit	22 - 11	11
4	Contribution margin ratio	Contribution margin per unit / Selling price per unit	11 / 22	0.5
5	Total fixed expense for the year	Fixed factory overhead + Fixed selling expenses	44,000+15,000	59,000