QS 6-7 Variable costing and contribution margin LO P2 Ramort Company reports the

Question

QS 6-7 Variable costing and contribution margin LO P2 Ramort Company reports the following cost data for its single product. The company regularly sells 20,000 units of its product at a price of $60 per unit. Direct materials Direct labor Overhead costs for the yea:r 10 per unit 12 per unit 3 per unit Variable overhead Fixed overhead per year $40,000 Selling and adminstrative costs for the year 2 per unit Variable Fixed $65,200 Normal production level (in units) 20,000 units Compute contribution margin under variable costing RAMORT COMPANY Contribution margin Sales $ 1,200,000 ess: Variable expenses Variable manufacuring expense Variable selling and administrative expense 40,000 otal variable expense 40,000 Contribution margin

Explanation / Answer

Contribution margin under variable costing

Sales 1200000 Variable expenses Variable manufacturing expense (500000) Variable selling and administrative expense (40000) Total variable expense (540000) Contribution margin 660000

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