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7 February, 13:19

Assuming no direct factory overhead costs (i. e., inventory carry costs) and $3 million dollars in combined promotion and sales budget, the Dim product manager wishes to achieve a product contribution margin of 35%. Given their product currently is priced at $35.00, what would they need to limit the material and labor costs to? a. $23.00b. $24.50c. $21.00d. $22.75

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  1. 7 February, 14:32
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    d. $22.75

    Explanation:

    We know that

    Contribution margin per unit = Selling price per unit - Variable expense per unit

    where,

    Selling price per unit is $35

    And, the contribution margin is 35%

    So, the Contribution margin per unit would be

    = Selling price per unit * contribution margin

    = $35 * 35%

    = $12.25

    Now after finding out the contribution margin per unit, the variable cost per unit would be

    = $35 - $12.25

    = $22.75

    And, the direct material and labor cost is a variable cost
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