Under absorption costing a company had the following per unit costs when 10,000

Question

Under absorption costing a company had the following per unit costs when 10,000 units were produced. Direct labor Direct material Variable overhead Total variable cost Fixed overhead ($74,000/10,000 units) Total product cost per unit $ 3.20 4.20 5.20 12.60 -7.40 $20.00 The company sells its product for $66.80 per unit. Due to new regulations, the company must now incur $3.20 per unit of hazardous waste disposal costs and $5,560 per year of fixed hazardous waste disposal costs. Compute the contribution margin per unit, including hazardous waste disposal costs. Contribution margin per un it

Explanation / Answer

Contribution margin per unit Selling price $66.80 Less: Variable costs Direct Labor $3.20 Direct Materials 4.20 Variable overhead 5.20 Waste Disposal costs 3.20 $15.80 Contribution margin per unit $51.00

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