The following information relates to Clyde Corporation which produced and sold 50,000 units last month. There were no beginning or ending inventories.Production and sales next month are expected to be 40,000 units.The company's unit contribution margin next month should be:
A)$16.63
B)$3.10
C)$7.98
D)$13.30

Question

The following information relates to Clyde Corporation which produced and sold 50,000 units last month.  There were no beginning or ending inventories.Production and sales next month are expected to be 40,000 units.The company's unit contribution margin next month should be:
A)$16.63 
B)$3.10 
C)$7.98 
D)$13.30

Quizplus · Accepted Answer

Variable expenses per unit = Variable expenses F1F1F1S1F1F1F10 Quantity sold
= ($140,000 + $45,000)F1F1F1S1F1F1F10 50,000 units
= $185,000 F1F1F1S1F1F1F10 50,000 units = $3.70 per unit
Selling price per unit = Sales F1F1F1S1F1F1F10 Quantity sold
= $850,000 F1F1F1S1F1F1F10 50,000 units = $17.00 per unit
Unit CM = Selling price per unit - Variable expenses per unit
= $17.00 per unit - $3.70 per unit = $13.30 per unit

The Following Information Relates to Clyde Corporation Which Produced and Sold