A Company with Monthly Fixed Costs of $170,000 Expects to Earn

question 19

Multiple Choice

A company with monthly fixed costs of $170,000 expects to earn monthly operating income of $25,000 by selling 6,500 units per month.What is the company's expected unit contribution margin?

• A)$30 per unit
• B)$26 per unit
• C)$22 per unit
• D)The information given is insufficient to determine unit contribution margin.

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Definitions:

Direct Labor Cost

The wages and other remunerations paid to employees who are directly involved in the production of goods or the provision of services.

Conversion Cost

The total cost of converting raw materials into finished goods, including labor and manufacturing overhead expenses.

Manufacturing Overhead

The collective expenses not directly tied to the production of a specific product, including costs like factory rent or utilities.

Direct Materials Cost

The cost of raw materials directly used in the production of goods or services.