Razor Inc. manufactures industrial components. One of its products used as a subcomponent in auto manufacturing is Fluoro2211. The selling price and cost per unit data for 9,000 units of Fluoro2211 are as follows. Per Unit Data Selling Price $ 150 Direct Materials 20 Direct Labor 15 Variable Manufacturing Overhead 12 Fixed Manufacturing Overhead 30 Variable Selling 3 Fixed Selling and Administrative 10 Total Costs 90 Operating Margin $ 60 During the next year, sales of Fluoro2211 are expected to be 10,000 units. All costs will remain the same except for fixed manufacturing overhead, which will increase by 20%, and direct materials, which will increase by 10%. The selling price per unit for next year will be $160. Based on these data, Razor Inc.'s total contribution margin for next year will be: (CMA adapted) $882,000. $980,000. $1,080,000. $972,000.
Razor Inc. manufactures industrial components. One of its products used as a subcomponent in auto manufacturing is Fluoro2211. The selling price and cost per unit data for 9,000 units of Fluoro2211 are as follows. Per Unit Data Selling Price $ 150 Direct Materials 20 Direct Labor 15 Variable Manufacturing Overhead 12 Fixed Manufacturing Overhead 30 Variable Selling 3 Fixed Selling and Administrative 10 Total Costs 90 Operating Margin $ 60 During the next year, sales of Fluoro2211 are expected to be 10,000 units. All costs will remain the same except for fixed manufacturing overhead, which will increase by 20%, and direct materials, which will increase by 10%. The selling price per unit for next year will be $160. Based on these data, Razor Inc.'s total contribution margin for next year will be: (CMA adapted) $882,000. $980,000. $1,080,000. $972,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Razor Inc. manufactures industrial components. One of its products used as a subcomponent in auto manufacturing is Fluoro2211. The selling price and cost per unit data for 9,000 units of Fluoro2211 are as follows.
During the next year, sales of Fluoro2211 are expected to be 10,000 units. All costs will remain the same except for fixed manufacturing overhead, which will increase by 20%, and direct materials, which will increase by 10%. The selling price per unit for next year will be $160. Based on these data, Razor Inc.'s total contribution margin for next year will be: (CMA adapted)
Per Unit Data | ||||
Selling Price | $ | 150 | ||
Direct Materials | 20 | |||
Direct Labor | 15 | |||
Variable Manufacturing |
12 | |||
Fixed Manufacturing Overhead | 30 | |||
Variable Selling | 3 | |||
Fixed Selling and Administrative | 10 | |||
Total Costs | 90 | |||
Operating Margin | $ | 60 |
$882,000.
|
||
$980,000.
|
||
$1,080,000.
|
||
$972,000.
|
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