Harris Corporation produces a single product.Last year, Harris manufactured 17, 000 units and sold 13, 000 units.Production costs for the year were as follows: Sales were $780, 000 for the year, variable selling and administrative expenses were $88, 400, and fixed selling and administrative expenses were $170, 000.There was no beginning inventory.Assume that direct labor is a variable cost. The contribution margin per unit was:
A)$17.50 per unit
B)$32.50 per unit
C)$27.30 per unit
D)$25.70 per unit

Question

Harris Corporation produces a single product.Last year, Harris manufactured 17, 000 units and sold 13, 000 units.Production costs for the year were as follows:  Sales were $780, 000 for the year, variable selling and administrative expenses were $88, 400, and fixed selling and administrative expenses were $170, 000.There was no beginning inventory.Assume that direct labor is a variable cost. The contribution margin per unit was:
A)$17.50 per unit 
B)$32.50 per unit 
C)$27.30 per unit 
D)$25.70 per unit

Quizplus · Accepted Answer

Variable expenses per unit:
 11eaa0c8_95bd_5d73_9cb2_a9e62ea0f201_TB2487_00 Selling price per unit = $780, 000 ÷ 13, 000 units = $60.00 per unit
Unit CM = Selling price per unit - Variable expenses per unit
= $60.00 per unit - $34.30 per unit = $25.70 per unit

Harris Corporation Produces a Single Product