Razor Inc. manufactures industrial components. One of its products used as a subcomponent in auto manufacturing is Fluoro2211. The selling price and cost per unit data for 9,000 units of Fluoro2211 are as follows. Top of Form
Per Unit Data
Selling Price $ 150
Direct Materials 20
Direct Labor 15
Variable Manufacturing
Overhead 12
Fixed Manufacturing
Overhead 30
Variable Selling 3
Fixed Selling and
Administrative 10
Total Costs 90
Operating Margin $ 60
During the next year, sales of Fluoro2211 are expected to be 10,000 units. All costs will remain the same except for fixed manufacturing overhead, which will increase by 20%, and material, which will increase by 10%. The selling price per unit for next year will be $160. Based on these data, Razor Inc.'s total contribution margin for next year will be: (CMA adapted)
a.) $882,000.
b.) $980,000.
c.) $972,000.
d.) $1,080,000.