Variable Cost, Fixed Cost, Contribution Margin Income Statement Chillmax Company plans to sell 3,500 pairs of casual shoes at $60 each in the coming year. Product costs include: Direct materials per pair 12 Direct labor per pair Variable factory overhead per pair Total fixed factory overhead 30,000 Variable selling expense is a commission of $3 per pair; fixed selling and administrative expense totals $48,000. Required: 1. Calculate the total variable cost per unit. 2. Calculate the total fixed expense for the year.

Instructions are listed below.

Explanation:

Giving the following information:

Product costs include:

Direct materials per pair 12

Direct labor per pair= 8 (invented)

Variable factory overhead per pair= 4 (invented)

Total fixed factory overhead 30,000

Variable selling expense is a commission of $3 per pair

fixed selling and administrative expense totaled $48,000.

1) Total variable cost= unitary cost* number of units

Unitary variable cost= direct material + direct labor + variable overhead

Unitary variable cost= 12 + 8 + 4= 24

Total variable cost= 3,500*24= $84,000

Variable selling expense is not part of the product cost.

2) Total fixed expense= fixed overhead + fixed selling and administrative expense

Total fixed expense= 30,000 + 48,000= $78,000

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