Question

Harris Corporation produces a single product. Last year, Harris manufactured 34,060 units and sold 28,600 units. Production costs for the year were as follows:

Fixed manufacturing overhead	$510,900
Variable manufacturing overhead	$269,074
Direct labor	$173,706
Direct materials	$255,450

Sales were $1,172,600, for the year, variable selling and administrative expenses were $148,720, and fixed selling and administrative expenses were $214,578. There was no beginning inventory. Assume that direct labor is a variable cost.

The contribution margin per unit would be: (Do not round intermediate calculations.)

$10.80 per unit

$16.40 per unit

$20.50 per unit

$15.30 per unit

Answer 1

Computation of variable cost;
	$
Direct Material	255,450.00
Direct Labor	173,706.00
Variable manufacturing overhead	269,074.00
Total variable manufacturing variable cost	698,230.00
Variable manufacturing cost per unit ( $ 698,230/34,060 units )	20.50	per unit
Variable selling and admin. Expenses ( $ 148,720 / 28,600 units )	5.20	per unit
Total variable cost per unit ( $ 20.50 + $ 5.20 )	25.70	per unit
Computation of contribution per unit;
Selling price per unit ( $ 1,172,600 / 28,600 units )	41	per unit
Less: Total variable cost per unit	(25.70)	per unit
Contribution margin per unit	15.3	per unit