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Question 10 Northern Star sells several products. Information of average revenue and costs is as follows:...


Question 10

Northern Star sells several products. Information of average revenue and costs is as follows:

                Selling price per unit                               $20.00

                Variable costs per unit:

                        Direct material                                     $4.00

                        Direct manufacturing labor             $1.60

                        Manufacturing overhead                  $0.40

                        Selling costs                                          $2.00

                Annual fixed costs                                 $96,000

The company sells 12,000 units at the end of the year.If direct labor and direct material costs increase by $1 each, contribution margin ________.

increases by $20,000

increases by $14,000

decreases by $24,000

decreases by $14,000
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