Roger Excavating Company experienced the following costs in 2017: $\begin{array}{lr}
\text { Direct materials } & \$ 1.75 \text { per unit } \
\text { Direct labor } & \$ 2.00 \text { per unit } \
\text { Variable manufacturing overhead } & \$ 2.50 \text { per unit } \
\text { Variable selling } & \$ 0.75 \text { per unit } \
\text { Fixed manufacturing overhead } & \$ 50,000 \
\text { Fixed selling } & \$ 15,000 \
\text { Fixed administrative } & \$ 5,000
\end{array}$ During 2017, the company manufactured 100,000 units and sold 80,000 units.If the average selling price per unit was $22.65, what is the amount of the company's contribution margin per unit?
A)$16.40
B)$15.65
C)$18.90
D)$13.65

Question

Quizplus · Accepted Answer

The contribution margin per unit is calculated by subtracting the variable costs from the selling price per unit. Variable costs include direct materials, direct labor, variable manufacturing overhead, and variable selling costs, which add up to $1.75 + $2.00 + $2.50 + $0.75 = $7.00. The selling price per unit is $22.65, so the contribution margin per unit is $22.65 - $7.00 = $15.65.

Roger Excavating Company Experienced the Following Costs in 2017 During 2017, the Company Manufactured 100,000 Units and Sold 80,000