Variable Costs, Contribution Margin, Contribution Margin Ratio Super-Tees Compan
ID: 2415627 • Letter: V
Question
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
$45,000
Variable selling expense is the redemption of a coupon, which averages $1.05 per T-shirt; fixed selling and administrative expenses total $17,000.
2. Prepare a contribution-margin-based income statement for Super-Tees Company for the coming year. If required, round your per unit answers to the nearest cent.
Total Per Unit
Sales
Total variable expenses
Total contribution margin
Total fixed expense
Operating income
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
$45,000
Explanation / Answer
The contribution-margin-based income statement is provided below:
Total Per Unit Sales (18,000*21) 378,000 21 Total variable expenses (18,000*(7.35 + 1.47 + .63 + 1.05)) 189,000 10.5 Total contribution margin 189,000 10.5 Total fixed expense (45,000 + 17,000) 62,000 Operating income $127,000Related Questions
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