This answer results from subtracting all costs, both variable and fixed, from sales, then reducing the result by the income taxes due and dividing the final result by 50,000. The contribution margin is sales minus variable costs only.
This answer results from subtracting all costs except fixed manufacturing costs from sales and dividing the result by 50,000. The contribution margin is sales minus variable costs only.
The contribution margin is the difference between sales and variable costs (sales ? variable costs). To find the contribution margin on a per unit basis, calculate the total contribution margin at a level of 50,000 units and divide by the 50,000 units sold. Since the contribution margin per unit does not change when the number of units changes, the contribution margin per unit for 40,000 units will be the same as the contribution margin per unit for 50,000 units. Sales of $850,000 ? Variable Manufacturing Costs of $140,000 ? Variable Selling & Administrative costs of $45,000 = Contribution Margin of $665,000. Dividing $665,000 by 50,000 units gives us a contribution margin per unit of $13.30.
This answer results from subtracting all costs, both variable and fixed, from sales and dividing the result by 50,000. The contribution margin is sales minus variable costs only.
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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