Rare Air Consulting incurred the following costs during the year: Depreciation of Office Furniture Direct Labor...
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Rare Air Consulting incurred the following costs during the year: Depreciation of Office Furniture Direct Labor Direct Materials $ 5,000 $12,000 $ 3,000 $50,000 Executive Salaries Liability Insurance $ 700 Office Rent $ 7,200 Sales Commissions $5,000 Vehicle Lease $ 7,200 Sales for the year are $100,000. Rare Air determined that only the prime costs and sales commission are to be classified as variable costs; all other cost are classified as fixed. Rare Air sold 500 units. 1. What is contribution margin? $ 2. What is the contribution margin per unit? $ 3. What is the contribution margin ratio? % Rare Air Consulting incurred the following costs during the year: Depreciation of Office Furniture Direct Labor Direct Materials $ 5,000 $12,000 $ 3,000 $50,000 Executive Salaries Liability Insurance $ 700 Office Rent $ 7,200 Sales Commissions $5,000 Vehicle Lease $ 7,200 Sales for the year are $100,000. Rare Air determined that only the prime costs and sales commission are to be classified as variable costs; all other cost are classified as fixed. Rare Air sold 500 units. 1. What is contribution margin? $ 2. What is the contribution margin per unit? $ 3. What is the contribution margin ratio? %
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Answer rating: 100% (QA)
To calculate the contribution margin and related metrics we first need to identify the variable cost... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,
Posted Date:
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