# Princeton Fabrication, Inc., produced and sold 1,200 units of the companys only product in March. You have

## Question:

Princeton Fabrication, Inc., produced and sold 1,200 units of the company’s only product in March. You have collected the following information from the accounting records:

Sales price (per unit) . . . . . . . . . . . . . . . . . . . . . . . . . . .          \$ 896

Manufacturing costs:

Fixed overhead (for the month) . . . . . . . . . . . . . . . . .            100,800

Direct labor (per unit) . . . . . . . . . . . . . . . . . . . . . . . . .            70

Direct materials (per unit) . . . . . . . . . . . . . . . . . . . . . .            224

Variable overhead (per unit) . . . . . . . . . . . . . . . . . . . .            140

Marketing and administrative costs:

Fixed costs (for the month). . . . . . . . . . . . . . . . . . . . .           134,400

Variable costs (per unit) . . . . . . . . . . . . . . . . . . . . . . .             28

Required

a. Compute:

1. Variable manufacturing cost per unit.

2. Full cost per unit.

3. Variable cost per unit.

4. Full absorption cost per unit.

5. Prime cost per unit.

6. Conversion cost per unit.

7. Profit margin per unit.

8. Contribution margin per unit.

9. Gross margin per unit.

b. If the number of units decreases from 1,200 to 800, which is within the relevant range, will the fixed manufacturing cost per unit increase, decrease, or remain the same? Explain.

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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Related Book For

## Fundamentals of Cost Accounting

ISBN: 978-0077398194

3rd Edition

Authors: William Lanen, Shannon Anderson, Michael Maher

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