CIMA BA2 · Chapter 4 · Question 8 of 8
A product sells for $30 per unit. Variable production cost is $12 per unit and sales commission is 10% of selling price. Fixed costs for the period are $175,000. If 16,000 units are produced and sold, what is the profit for the period under marginal costing?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) $65,000
Explanation
Sales commission = 10% x $30 = $3 per unit. Contribution per unit = $30 - $12 - $3 = $15. Total contribution = 16,000 x $15 = $240,000. Profit = $240,000 - $175,000 = $65,000.
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