Ramort company reports the following cost data for its single product. the company regularly sells 20,000 units of its product at a price of $60 per unit. direct materials $10 per unit direct labor $12 per unit overhead costs for the yearvariable overhead $3 per unit fixed overhead per year $40,000 selling and administrative costs for the year variable $2 per unit fixed $65,200 normal production level (in units) 20,000 units compute contribution margin under variable costing.

Contribution margin under variable costing is $660,000

Explanation:

As we know that, the contribution margin equals to

Sales - variable cost

In the variable costing, we recognized the variable expense and the variable selling and administrative cost

So,

The variable cost could be

1. Variable expense per unit= Direct material per unit + direct labor per unit + variable overhead

= $10 + $12 + $3

= $25

So, variable expense = 20,000 units × $25 = $500,000

And, the variable selling and administrative cost =  20,000 units × $2 = $40,000

Sales is = 20,000 units × $60 = $1,200,000

Now put these values to the above formula  

So, the value would equal to

= $1,200,000 - $500,000 - $40,000

= $660,000

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