Question

A cement manufacturer has supplied the following data:

Tons of cement produced and sold		248,000
Sales revenue	$	1,041,600
Variable manufacturing expense	$	417,000
Fixed manufacturing expense	$	276,000
Variable selling and administrative expense	$	79,000
Fixed selling and administrative expense	$	216,000
Net operating income	$	53,600

What is the company's unit contribution margin? (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• $2.00 per unit

• $0.22 per unit

• $4.20 per unit

• $2.20 per unit

Answer 1

Total number of cement produced and sold = 248,000

Sales revenue = $1,041,600

Variable manufacturing expense = $417,000

Variable selling and administrative expense = $79,000

Total variable expenses = Variable manufacturing expense +Variable selling and administrative expense

= 417,000+79,000

= $496,000

Selling price per unit = Sales revenue/Total number of cement produced and sold

= 1,041,600/248,000

= $4.20

Variable expense per unit = Total variable expenses /Total number of cement produced and sold

= 496,000/248,000

= $2

Contribution margin per unit = Selling price per unit-Variable expense per unit

= 4.20-2

= $2.20 per unit

Fourth option is correct.

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