Krepps Corporation produces a single product. Last year, Krepps manufactured 20,000 units and sold 15,000 units. Production costs for the year were as follows:
Sales totaled $825,000 for the year, variable selling and administrative expenses totaled $108,000, and fixed selling and administrative expenses totaled $165,000. There was no beginning inventory. Assume that direct labor is a variable cost.
-The contribution margin per unit was:
A) $23.80 per unit
B) $31.00 per unit
C) $25.60 per unit
D) $19.00 per unit

Question

Krepps Corporation produces a single product. Last year, Krepps manufactured 20,000 units and sold 15,000 units. Production costs for the year were as follows:
  Sales totaled $825,000 for the year, variable selling and administrative expenses totaled $108,000, and fixed selling and administrative expenses totaled $165,000. There was no beginning inventory. Assume that direct labor is a variable cost.
-The contribution margin per unit was:
A) $23.80 per unit 
B) $31.00 per unit 
C) $25.60 per unit 
D) $19.00 per unit

Quizplus · Accepted Answer

Variable expenses per unit:
 11ea7761_182e_45de_81a5_7fc1ef9ab66b_TB2580_00 Selling price per unit = $825,000 ÷ 15,000 units = $55.00 per unit
Unit CM = Selling price per unit - Variable expenses per unit
= $55.00 per unit - $31.20 per unit = $23.80 per unit

Krepps Corporation Produces a Single Product