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The following data pertain to Epsom Corporation's operations: Unit sales 14,100 units Selling...

Question:

The following data pertain to Epsom Corporation's operations:

Unit sales 14,100 units
Selling price $40 per unit
Contribution margin ratio 40%
Margin of safety percentage 30%

The variable expense per unit is:

a. $16.00 per unit

b. $28.00 per unit

c. $24.00 per unit

d. $12.00 per unit

Variable cost

Variable cost changes in the total amount of cost but stays constant on its per unit cost basis. This cost usually compose of materials, labor and etc.

Answer and Explanation:

The variable expense per unit is (C) $24.00 per unit

Since variable cost ratio and contribution ratio are complimentary.

40% CM% + 60%Variable = 100% Sales

40 * 60% = 24


Learn more about this topic:

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Variable Costing: Method, Formula & Advantages

from Financial Accounting: Help and Review

Chapter 13 / Lesson 5
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