Exercise 2-27 Basic Concepts (LO 2-1, 2, 6)

The following data apply to the provision of psychological testing services.

Sales price per unit (1 unit = 1 test plus feedback to client)	$	320
Fixed costs (per month):
Selling and administration		16,000
Production overhead (e.g., rent of testing facilities)		16,000
Variable costs (per test):
Labor for oversight and feedback		140
Outsourced test analysis		22
Materials used in testing		7
Production overhead		15
Selling and administration (e.g., scheduling and billing)		12
Number of tests per month		500	tests

Required:

Calculate the amount for each of the following (one unit = one test) if the number of tests is 500 per month. Also calculate if the number of tests decreases to 400 per month.

A. VARIABLE PRODUCTION COST PER UNIT

B. VARIABLE COST PER UNIT

C. FULL COST PER UNIT

D. FULL ABSORPTION COST PER UNIT

E. PRME COST PER UNIT

F. CONVERSION MARGIN PER UNIT

G. CONTRIBUTION MARGIN PER UNIT

H. GROSS MARGIN PER UNIT