Krepps Corporation produces a single product. Last year, Krepps manufactured 27,
ID: 2414346 • Letter: K
Question
Krepps Corporation produces a single product. Last year, Krepps manufactured 27,970 units and sold 22.200 units. Production costs for the year were as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead $234,943 131,49 240,542 $335,640 Sales totaled $1,043,400 for the yesr, varlable selling and adminlistrative expenses totaled $113.220, and fixed selling and administrative expenses totaled $198.587. There was no beginning Inventory. Assume that direct labor Is a varlable cost The contribution margin per unit was: Multiple Chaice $20.20 per unit $15.70 per unit $25.30 per unit $21.30 per unitExplanation / Answer
Contribution Margin Per Unit = Selling Price Per Unit - Variable Cost Per Unit
= $ 47 Per Unit - $ 26.80 Per Unit
= $ 20.20 Per Unit
Hence, the correct answer is $ 20.20 per unit
Notes :
Selling Price Per Unit = Total Sales / Total Units Sold
= $ 1,043,000 / 22,200 Units
= $ 47 Per Unit
Total Variable Cost for 27,970 Units= Direct Materials + Direct Labor + Variable Manufacturing Overhead
= $ 234,948 + $131,459+ $ 240,542
= $ 606,949
Variable Cost Per Unit 27,970 Units =Total Variable Cost for 27,970 Units / 27,970 Units
= $ 606,949 / 27,970 Units
= $ 21.70
Total Variable Cost for 22,200 Units = Variable Selling and Administrative Expenses / 22,200 Units
= $ 113,220 / 22,200 Units
= $ 5.10 Per Unit
Hence, total Variable Cost = $ 21.70 + $ 5.10 Per Unit
= $ 26.80 Per Unit
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