Assume a Selling Price of $20 Per Unit, Variable Cost

question 61

Essay

Assume a selling price of $20 per unit, variable cost per unit of $12, and total fixed cost of $500.If 200 units are sold, calculate the contribution margin and the operating income.

---

Definitions:

Administrative Expense

Administrative expense includes overhead costs not directly tied to a specific project or production process, such as salaries of executive staff, office supplies, and utilities.

Direct Labor-Hours

The amount of time spent by workers directly involved in manufacturing a product or delivering a service.

Raw Materials

The basic substances in their natural, modified, or semi-processed states used as inputs for manufacturing processes.

Selling and Administrative Expense

Costs related to the selling of products and the administration of a business.