Question

Exercise 2-27 Basic Concepts (LO 2-1, 2, 6)

The followingdata apply to the provision of psychological testing services.

Sales price per unit (1 unit = 1 test plus feedback toclient)	$	320
Fixed costs (per month):
Selling andadministration		16,000
Production overhead(e.g., rent of testing facilities)		16,000
Variable costs (per test):
Labor for oversight andfeedback		140
Outsourced testanalysis		22
Materials used intesting		7
Production overhead		15
Selling andadministration (e.g., scheduling and billing)		12
Number of tests per month		500	tests

Required:

Calculate the amount for each of the following (one unit = onetest) if the number of tests is 500 per month. Also calculate ifthe number of tests decreases to 400 per month.

A. VARIABLE PRODUCTION COST PER UNIT

B. VARIABLE COST PER UNIT

C. FULL COST PER UNIT

D. FULL ABSORPTION COST PER UNIT

E. PRME COST PER UNIT

F. CONVERSION MARGIN PER UNIT

G. CONTRIBUTION MARGIN PER UNIT

H. GROSS MARGIN PER UNIT