Variable Costs, Contribution Margin, Contribution Margin Ratio

Super-Tees Company plans to sell 10,000 T-shirts at $24 each in the coming year. Product costs include:

Direct materials per T-shirt $8.40 Direct labor per T-shirt $1.68 Variable overhead per T-shirt $0.72 Total fixed factory overhead $40,000

Variable selling expense is the redemption of a coupon, which averages $1.20 per T-shirt; fixed selling and administrative expenses total $15,000.

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 $ $ $ $ $

3. What if the per unit selling expense increased from $1.20 to $2.55? 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 $ b. Total variable cost per unit $ c. Contribution margin per unit $ d. Contribution margin ratio e. Total fixed expense for the year $