Answer (B) is correct . Contribution margin is the excess of sales over variable costs. Sales will be at $300 per unit. Variable costs are $100, consisting of $40 of direct materials, $30 of direct labor, $24 of variable overhead, and $6 of variable selling costs. Thus, the contribution margin will be $200 per unit ($300 – $100).
Answer (A) is incorrect because Excluding variable selling costs results in $206.
Answer (C) is incorrect because Including fixed manufacturing overhead results in $140.
Answer (D) is incorrect because This amount is the operating margin.
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What will the contribution margin per unit be if the company sells 10,000 units?