Elfalan Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 80,000 units per month is as follows:
The normal selling price of the product is $67.80 per unit.
An order has been received from an overseas customer for 3,000 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.90 less per unit on this order than on normal sales.
Direct labor is a variable cost in this company.
-What is the contribution margin per unit on normal sales?
A) $7.20 per unit
B) $33.40 per unit
C) $5.80 per unit
D) $7.70 per unit

Question

Elfalan Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 80,000 units per month is as follows:
  The normal selling price of the product is $67.80 per unit.
An order has been received from an overseas customer for 3,000 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.90 less per unit on this order than on normal sales.
Direct labor is a variable cost in this company.
-What is the contribution margin per unit on normal sales?
A) $7.20 per unit 
B) $33.40 per unit 
C) $5.80 per unit 
D) $7.70 per unit

Quizplus · Accepted Answer

11ea7761_1610_e34b_81a5_8b35eeb16451_TB2580_00 11ea7761_1611_0a5c_81a5_b32b091f11c3_TB2580_00

Elfalan Corporation Produces a Single Product