Question

The following data apply to the provision of psychological testing services:

Sales price per unit (1 unit = 1 test plus feedback to client)	$	330
Fixed costs (per month):
Selling and administration		20,000
Production overhead (e.g., rent of testing facilities)		20,000
Variable costs (per test):
Labor for oversight and feedback		170
Outsourced test analysis		21
Materials used in testing		5
Production overhead		15
Selling and administration (e.g., scheduling and billing)		17
Number of tests per month		2,000	tests

Required:

Calculate the amount for each of the following (one unit = one test) if the number of tests is 2,000 per month. Also calculate if the number of tests decreases to 1,250 per month. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.)

		2,000 Tests	1,250 Tests
a.	Variable production cost per unit.
b.	Variable cost per unit.
c.	Full cost per unit.
d.	Full absorption cost per unit.
e.	Prime cost per unit.
f.	Conversion cost per unit.
g.	Contribution margin per unit.
h.	Gross margin per unit.

Answer 1

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