Variable Costs, Contribution Margin, Contribution Margin Ratio Super-Tees Company plans to sell 18,000 T-shirts at $21 each in the coming year. Product costs include: Direct materials per T-shirt $7.35 Direct labor per T-shirt $1.47 Variable overhead per T-shirt $0.63 Total fixed factory overhead $38,000 Variable selling expense is the redemption of a coupon, which averages $1.05 per T-shirt; fixed selling and administrative expenses total $12,000. Required: 1. Calculate the following values: Round dollar amounts to the nearest cent and round ratio values to three decimal places (express the ratio as a decimal rather than a percentage). a. Variable product cost per unit $ b. Total variable cost per unit $ c. Contribution margin per unit $ d. Contribution margin ratio e. Total fixed expense for the year $
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Variable Costs, Contribution Margin, Contribution Margin Ratio
Super-Tees Company plans to sell 18,000 T-shirts at $21 each in the coming year. Product costs include:
|
Direct materials per T-shirt |
$7.35 |
|
Direct labor per T-shirt |
$1.47 |
|
Variable |
$0.63 |
|
Total fixed factory overhead |
$38,000 |
Variable selling expense is the redemption of a coupon, which averages $1.05 per T-shirt; fixed selling and administrative expenses total $12,000.
Required:
1. Calculate the following values:
Round dollar amounts to the nearest cent and round ratio values to three decimal places (express the ratio as a decimal rather than a percentage).
a. Variable product cost per unit
$
b. Total variable cost per unit
$
c. Contribution margin per unit
$
d. Contribution margin ratio
e. Total fixed expense for the year
$
Step by step
Solved in 2 steps
