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Question 20.5: The following data are for Moss Creek Apparel:

The following data are for Moss Creek Apparel:

East West
Sales volume (units):
Shirts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 5,000
Shorts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 8,000
Sales price:
Shirts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12 $13
Shorts . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16 $18
Variable cost per unit:
Shirts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7 $ 7
Shorts . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10 $10

Determine the contribution margin for (a) Shorts and (b) the West Region.

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a. $88,000 [4,000 units × ($16 – $10)] + [8,000 units × ($18 – $10)]
b. $94,000 [5,000 units × ($13 – $7)] + [8,000 units × ($18 – $10)]

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