The Chou Company provided the following information regarding its one and only product, rollers:

-The unit cost of a roller using the contribution approach is
A) $16.50.
B) $5.00.
C) $14.50.
D) $11.50.

Question

The Chou Company provided the following information regarding its one and only product, rollers:
 
-The unit cost of a roller using the contribution approach is
A) $16.50. 
B) $5.00. 
C) $14.50. 
D) $11.50.

Quizplus · Accepted Answer

To calculate the unit cost of a roller using the contribution approach, we need to subtract the variable cost per unit from the selling price per unit.

Contribution per unit = Selling price per unit - Variable cost per unit

From the given information, we can calculate the contribution per unit as follows:

Contribution per unit = $27.50 - $16.00 - $0.50 - $0.50 = $10.50

Therefore, the unit cost of a roller using the contribution approach is:

Unit cost per unit = Variable cost per unit + Contribution per unit
Unit cost per unit = $16.00 + $10.50 = $26.50

Hence, the correct answer is D) $11.50.

The Chou Company Provided the Following Information Regarding Its One