Super-Tees Company plans to sell 12,000 T-shirts at $16 each in the coming year. Product costs include:
Question:
Super-Tees Company plans to sell 12,000 T-shirts at $16 each in the coming year. Product costs include:
Direct materials per T-shirt …………….. $5.75
Direct labor per T-shirt …………….. $1.25
Variable overhead per T-shirt …………….. $0.60
Total fixed factory overhead …………….. $43,000
Variable selling expense is the redemption of a coupon, which averages $0.80 per T-shirt; fixed selling and administrative expenses total $19,000.
Required:
1. Calculate the:
a. Variable product cost per unit
b. Total variable cost per unit
c. Contribution margin per unit
d. Contribution margin ratio (rounded to four significant digits)
e. Total fixed expense for the year
2. Prepare a contribution-margin-based income statement for Super-Tees Company for the coming year.
3. What if the per unit selling expense increased from $0.80 to $1.75? Calculate the new values for the following:
a. Variable product cost per unit
b. Total variable cost per unit
c. Contribution margin per unit
d. Contribution margin ratio (rounded to four significant digits)
e. Total fixed expense for the year
Contribution MarginContribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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