1.

Variable Costs, Contribution Margin, Contribution Margin Ratio

Super-Tees Company plans to sell 18,000 T-shirts at $22 each in the coming year. Product costs include:

Direct materials per T-shirt	$7.70
Direct labor per T-shirt	$1.54
Variable overhead per T-shirt	$0.66
Total fixed factory overhead	$40,000

Variable selling expense is the redemption of a coupon, which averages $1.10 per T-shirt; fixed selling and administrative expenses total $11,000.

Required:

1. Calculate the following values: Round dollar amounts to the nearest cent and round ratio values to three decimal places (express the ratio as a decimal rather than a percentage).

a. Variable product cost per unit
b. Total variable cost per unit	$
c. Contribution margin per unit	$
d. Contribution margin ratio
e. Total fixed expense for the year	$

2. Prepare a contribution-margin-based income statement for Super-Tees Company for the coming year. If required, round your per unit answers to the nearest cent.

Super-Tees Company
Contribution-Margin-Based Operating Income Statement
For the Coming Year
	Total	Per Unit
	$fill in the blank e2d382091021fe1_2	$fill in the blank e2d382091021fe1_3
	fill in the blank e2d382091021fe1_5	fill in the blank e2d382091021fe1_6
	$fill in the blank e2d382091021fe1_8	$fill in the blank e2d382091021fe1_9
	fill in the blank e2d382091021fe1_11
	$fill in the blank e2d382091021fe1_13

3. What if the per unit selling expense increased from $1.10 to $2.35? Calculate new values for the following: Round dollar amounts to the nearest cent and round ratio values to four decimal places (express the ratio as a decimal rather than a percentage):

a. Variable product cost per unit	$fill in the blank 6a8b6ef9704d07c_1
b. Total variable cost per unit	$fill in the blank 6a8b6ef9704d07c_2
c. Contribution margin per unit	$fill in the blank 6a8b6ef9704d07c_3
d. Contribution margin ratio	fill in the blank 6a8b6ef9704d07c_4
e. Total fixed expense for the year	$fill in the blank 6a8b6ef9704d07c_5