FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Super-Tees Company plans to sell 12,000 T-shirts at $16 each in the coming year. Product costs
include:
Direct materials per T-shirt $5.75
Direct labor per T-shirt $1.25
Variable
Total fixed factory overhead $43,000
Variable selling expense is the redemption of a coupon, which averages $0.80 per T-shirt; fixed selling and administrative expenses total $19,000.
Required:
1. Calculate the:
a. Variable product cost per unit
b. Total variable cost per unit
c. Contribution margin per unit
d. Contribution margin ratio (rounded to four significant digits)
e. Total fixed expense for the year
2. Prepare a contribution-margin-based income statement for Super-Tees Company for the
coming year.
3. What if the per unit selling expense increased from $0.80 to $1.75? Calculate the new values
for the following:
a. Variable product cost per unit
b. Total variable cost per unit
c. Contribution margin per unit
d. Contribution margin ratio (rounded to four significant digits)
e. Total fixed expense for the year
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