Razor Incorporated 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 9,030 units of Fluoro2211 are as follows. Per Unit DataSelling Price$ 210Direct Materials50Direct Labor18Variable Manufacturing Overhead15Fixed Manufacturing Overhead33Variable Selling6Fixed Selling and Administrative13Total Costs135Operating Margin$ 75During the next year, sales of Fluoro2211 are expected to be 10,030 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 $220. Based on these data, Razor Incorporated's total contribution margin for next year will be: (CMA adapted)

The contribution margin is calculated as difference between sales and variable costs. The variable…

Answered: Razor Incorporated manufactures…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Razor Incorporated 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 9,030 units of Fluoro2211 are as follows.

	Per Unit Data
Selling Price	$ 210
Direct Materials	50
Direct Labor	18
Variable Manufacturing Overhead	15
Fixed Manufacturing Overhead	33
Variable Selling	6
Fixed Selling and Administrative	13
Total Costs	135
Operating Margin	$ 75

During the next year, sales of Fluoro2211 are expected to be 10,030 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 $220. Based on these data, Razor Incorporated's total contribution margin for next year will be: (CMA adapted)

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