Question

Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows:

	Average Cost per Unit
Direct materials	$	6.10
Direct labor	$	3.60
Variable manufacturing overhead	$	1.40
Fixed manufacturing overhead	$	4.00
Fixed selling expense	$	3.10
Fixed administrative expense	$	2.10
Sales commissions	$	1.10
Variable administrative expense	$	0.55

13. If the selling price is $22.10 per unit, what is the contribution margin per unit?

Answer 1

Contribution Margin per Unit = $9.35

Particulars	Amount
Selling Price	$22.1
Less: Variable Costs
Direct Materials	$6.1
Direct Labour	$3.6
Variable Manufacturing Overhead	$1.4
Sales Comission	$1.1
Variable Administrative Expenses	$0.55
Contribution Margin per Unit	$9.35