Suppose that Larimer Company sells a product for $20. Unit costs are as follows: Direct materials $1.70 Direct labor 1.60 Variable factory overhead 2.00 Variable selling and administrative expense 1.50   Total fixed factory overhead is $55,240 per year, and total fixed selling and administrative expense is $38,480.   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. Enter all amounts as positive numbers.

Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 9P: Grand Canyon Manufacturing Inc. produces and sells a product with a price of 100 per unit. The...
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Suppose that Larimer Company sells a product for $20. Unit costs are as follows:
Direct materials $1.70
Direct labor 1.60
Variable factory overhead 2.00
Variable selling and administrative expense 1.50
 
Total fixed factory overhead is $55,240 per year, and total fixed selling and administrative expense is $38,480.
  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. Enter all amounts as positive numbers.
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