Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen

Exercise 46

VARIABLE COSTS, CONTRIBUTION MARGIN, CONTRIBUTION MARGIN RATIO
Custom Screenprinting Company plans to sell 8,000 T-shirts at $15 each in the coming year. Product costs include:

Variable selling expense is the redemption of a coupon, which averages $1.00 per T-shirt; fixed selling and administrative expense totals $10,000.
Required:
1. Calculate the:
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
2. Prepare a contribution-margin-based income statement for Custom Screen-printing Company for the coming year.
3. What if the per unit selling expense increased from $1.00 to 1.75? Calculate the new values for the following:
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