All costs shown are on a per unit of product sold basis.

Sales = $18/unit
Direct Materials = $2/unit
Direct Labor = $2/unit
Variable Manufacturing Overhead = $2/unit
Variable selling and administrative expenses = $2/unit
Fixed Manufacturing Overhead = $2/unit at current volume levels
Fixed selling and administrative expenses = $2/unit at current volume levels

If the Variable Manufacturing Overhead decreased by $1/unit, Direct Labor increased by $1/unit , and Fixed Manufacturing Overhead increased by $2/unit, what would the change to the Contribution Margin be?

To calculate the change in the contribution margin, we need to first determine the existing contribution margin per unit and then calculate the new contribution margin per unit after the given changes occur.

The contribution margin per unit is calculated by subtracting the variable costs per unit from the sales price per unit:

Contribution Margin = Sales - Variable Costs

Given the following costs per unit:
Sales = $18/unit
Direct Materials = $2/unit
Direct Labor = $2/unit
Variable Manufacturing Overhead = $2/unit
Variable Selling and Administrative Expenses = $2/unit

Before the changes, the existing contribution margin per unit is:
Contribution Margin = $18 - ($2 + $2 + $2 + $2) = $10

Now, let's calculate the new contribution margin per unit after the changes occur:
Variable Manufacturing Overhead decreased by $1/unit:
Variable Manufacturing Overhead = $2 - $1 = $1/unit

Direct Labor increased by $1/unit:
Direct Labor = $2 + $1 = $3/unit

Fixed Manufacturing Overhead increased by $2/unit:
Fixed Manufacturing Overhead = $2 + $2 = $4/unit

The new contribution margin per unit is:
Contribution Margin = $18 - ($2 + $3 + $1 + $2 + $2) = $18 - $10 = $8

Therefore, the change to the Contribution Margin is a decrease of $2/unit ($10 - $8).