Donald Company provided the following information regarding its one and only product -skateboards. $\begin{array}{ll}
\text { Direct materials used } & \$ 350,000 \
\text { Direct labor } & 170,000 \
\text { Fixed overhead } & 95,000 \
\text { Variable overhe ad } & 20,000 \
\text { Variable s elling and administrative } & 55,000 \
\text { Units produced and sold } & 40,000
\end{array}$ The manufacturing cost per unit, if the contribution approach is used, is:
A) $13.50
B) $15.50
C) $13.00
D) $14.75

Question

Quizplus · Accepted Answer

The contribution approach assigns only variable manufacturing costs to units produced. In this case, the variable manufacturing costs are direct materials used, direct labor, and variable overhead, which total $350,000 + $170,000 + $20,000 = $540,000. The manufacturing cost per unit is $540,000 / 40,000 units = $13.50.

Donald Company Provided the Following Information Regarding Its One and Only