Pam-Tees Company plans to sell 11,000 T-shirts at $15 each in the coming year. Product costs include: Direct materials per T-shirt $4.75 Direct labour per T—shirt $2.25 Variable overhead per T- shirt $0.50 Total fixed factory overhead $32,000 Variable selling expense is the redemption of a coupon, which averages $0.70 per T-shirt; fixed selling and administrative expenses total $17,000. Required: Calculate the: 1. Variable product cost per unit 2. Contribution margin ratio (rounded to four significant digits) 3. Total fixed expense for the year 4. Break Even point in quantity (Q) 5. Margin of Safety in Quantity (Q)
Pam-Tees Company plans to sell 11,000 T-shirts at $15 each in the coming year. Product costs include:
|
Direct materials per T-shirt
|
$4.75
|
|
Direct labour per T—shirt
|
$2.25
|
|
Variable
|
$0.50 |
|
Total fixed factory overhead |
$32,000 |
Variable selling expense is the redemption of a coupon, which averages $0.70 per T-shirt; fixed selling and administrative expenses total $17,000.
Required:
Calculate the:
1. Variable product cost per unit
2. Contribution margin ratio (rounded to four significant digits)
3. Total fixed expense for the year
4. Break Even point in quantity (Q)
5. Margin of Safety in Quantity (Q)
Note:
Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and specify the other subparts (up to 3) you’d like answered.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
