Answer (D) is correct . Unit contribution margin is the difference between unit selling price and unit variable cost. Unit selling price is $17 ($850,000 ÷ 50,000 units), and unit variable cost is $3.70 [($140,000 variable manufacturing cost + $45,000 variable S&A cost) ÷ 50,000 units sold]. Accordingly, unit contribution margin is $13.30 ($17 – $3.70).
Answer (A) is incorrect because This is an after-tax amount based on the inclusion of all fixed costs in the calculation.
Answer (B) is incorrect because This amount is erroneously based on the inclusion of all fixed costs in the calculation of the UCM.
Answer (C) is incorrect because Including the $300,000 of fixed S&A costs in the calculation of the UCM results in $7.30.
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For the next accounting period, if production and sales are expected to be 40,000 units, the company should anticipate a contribution margin per unit of