ICAEW BIP · Chapter 2 · Question 5 of 12
Product Q has the following unit data: Selling price £48 Direct materials £14 Direct labour £9 Variable production overhead £5 Variable selling cost £3 Fixed production overhead £7 What is the contribution per unit of product Q?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) £17
Explanation
Contribution is selling price less all variable costs, including variable selling costs. £48 - (£14 + £9 + £5 + £3) = £17. Fixed production overhead is not deducted because under marginal costing it is treated as a period cost.
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