Calculate the variable cost and contribution margin per unit

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Reference no: EM13940212

BASIC BREAK-EVEN CALCULATIONS

Suppose that Adams Company sells a product for $16. Unit costs are as follows:

Direct materials	$3.90
Direct labor	1.40
Variable overhead	2.10
Variable selling and administrative expense	1.60

Total fixed overhead is $52,000 per year, and total fixed selling and administrative expense is $37,950.

Required:

1. Calculate the variable cost per unit and the contribution margin per unit.

2. Calculate the contribution margin ratio and the variable cost ratio.

3. Calculate the break-even units.

4. Prepare a contribution margin income statement at the break-even number of units.

Reference no: EM13940212

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