Question

The following data apply to the provision of psychological testing services.
Sales price per unit (1 unit _ 1 test plus feedback to client).................... $ 600
Fixed costs (per month):
Selling and administration....................................................................... 40,000
Production overhead (e.g., rent of testing facilities)................................ 60,000
Variable costs (per test):
Labor for oversight and feedback.......................................................... 240
Outsourced test analysis......................................................................... 40
Materials used in testing......................................................................... 10
Production overhead............................................................................... 20
Selling and administration (e.g., scheduling and billing)........................ 30
Number of tests per month......................................................................1,000 tests

Required
Give the amount for each of the following (one unit = one test):
a. Variable production cost per unit.
b. Variable cost per unit.
c. Full cost per unit.
d. Full absorption cost per unit.
e. Prime cost per unit.
f. Conversion cost per unit.
g. Contribution margin per unit.
h. Gross margin per unit.
i. Suppose the number of units decreases to 800 tests per month, which is within the relevant range. Which parts of (a) through (h) will change? For each amount that will change, give the new amount for a volume of 800 tests.



$1.99
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  • CreatedDecember 18, 2013
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