Answer the Following Questions Using the Information Below:
Northern Star

question 151

Multiple Choice

Answer the following questions using the information below:
Northern Star sells several products. Information of average revenue and costs is as follows:
$$\begin{array} { l r } \text { Selling price per unit } & \$ 20.00 \\\text { Variable costs per unit: } & \\\text { Direct material } & \$ 4.00 \\\text { Direct manufacturing labor } & \$ 1.60 \\\text { Manufacturing overhead } & \$ 0.40 \\\text { Selling costs } & \$ 2.00 \\\text { Annual fixed costs } & \$ 96,000\end{array}$$
$\text { The company sells } 12,000 \text { units at the end of the year. }$
-The contribution margin per unit is ________.

• A) $11.00
• B) $12.00
• C) $4.00
• D) $14.00

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Definitions:

Relevant Range

The range of activity within which the assumptions made about cost behavior in cost-volume-profit analysis are valid.

Cost Estimates

A predictive calculation of the anticipated expenses for a project or production, used for budgeting and planning purposes.

Marginal Cost

The cost of producing one additional unit of a product or service.

Relevant Range

The range of activity or volume in which the assumptions about fixed costs and variable costs are valid.