Wessner Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 6.20 Direct labor $ 2.80 Variable manufacturing overhead $ 1.45 Fixed manufacturing overhead $ 12,000 Sales commissions $ 1.00 Variable administrative expense $ 0.55 Fixed selling and administrative expense $ 4,000 "If the selling price is $25.00 per unit, the contribution margin per unit sold is closest to": Multiple Choice $9.00 $16.00 $11.55 $13.00

The correct answer is D: $13

Explanation:

Giving the following information:

Cost per Unit Cost per Period:

Direct materials $ 6.20

Direct labor $ 2.80

Variable manufacturing overhead $ 1.45

Fixed manufacturing overhead $ 12,000

Sales commissions $ 1.00

Variable administrative expense $ 0.55

Fixed selling and administrative expense $ 4,000

Price = 25

Contribution margin = Price - variable costs

Variable costs = direct materials + direct labor + variable manufacturing overhead + sales commissions + variable administrative expense

Variavle costs = 6.20 + 2.80 + 1.45 + 1 + 0.55 = $12

Contribution margin per unit = 25 - 12 = $13