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Super-Tees Company plans to sell 12,000 T-shirts at $16 each in the coming year. Product costs include: 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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Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

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Chapter
Section
BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 16, Problem 1CE
Textbook Problem
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Super-Tees Company plans to sell 12,000 T-shirts at $16 each in the coming year. Product costs include:

Chapter 16, Problem 1CE, Super-Tees Company plans to sell 12,000 T-shirts at 16 each in the coming year. Product costs

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. 1. Calculate the:
    1. a. Variable product cost per unit
    2. b. Total variable cost per unit
    3. c. Contribution margin per unit
    4. d. Contribution margin ratio (rounded to four significant digits)
    5. e. Total fixed expense for the year
  2. 2. Prepare a contribution-margin-based income statement for Super-Tees Company for the coming year.
  3. 3. What if the per unit selling expense increased from $0.80 to $1.75? Calculate the new values for the following:
    1. a. Variable product cost per unit
    2. b. Total variable cost per unit
    3. c. Contribution margin per unit
    4. d. Contribution margin ratio (rounded to four significant digits)
    5. e. Total fixed expense for the year

1. a.

To determine

Compute the variable product cost per unit.

Explanation of Solution

Variable Cost: Variable costs refer to the costs that are involved in the production, and vary as per the changes in the volume of production.

Compute the variable product cost per unit of T-shirt:

Variable Product Cost=Direct materials + Direct labor +�

1. b.

To determine

Compute the total variable cost per unit.

1. c.

To determine

Compute the contribution margin cost per unit.

1. d.

To determine

Compute the contribution margin ratio.

1. e.

To determine

Compute the total fixed expense for the year.

2.

To determine

Draw up the contribution margin based income statement for Company ST.

3. a.

To determine

Compute the variable product cost per unit.

3. b.

To determine

Compute the total variable cost per unit.

3. c.

To determine

Compute the contribution margin cost per unit.

3. d.

To determine

Compute the contribution margin ratio.

3. e.

To determine

Compute the total fixed expense for the year.

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Chapter 16 Solutions

Cornerstones of Cost Management (Cornerstones Series)
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