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25 August, 10:02

Perfect fit company sells hand-sewn shirts for $40 per shirt. it incurs monthly fixed costs of $5,000. the contribution margin ratio is calculated to be 20%. what is the variable cost per shirt?

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  1. 25 August, 12:05
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    The variable cost per shirt is $32.

    Solution: Contribution margin ratio 20%

    Sales price per shirt $40 Contribution Margin = $40 x 20% = $8

    Variable cost per shirt $32

    Variable cost is a company expenses which varies on the production outputs.
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