The ARIH Bike Company makes 100 bikes each week and its costs are as follows: 

Direct materials £4,000 

Direct labour £5,000 

Production overheads £5,000 

Investigations into the behaviour of costs have revealed the following information:

 • direct materials are variable costs 

• direct labour is a variable cost of the production overheads, £2,000 is a fixed cost, and the remainder is a variable cost .

The selling price of each bike is £200.As an accounts assistant at the Wyvern Bike Company, you are asked to:

• calculate the marginal cost of producing each bike 

• show the expected contribution per bike *