Question

For Buffalo Co., at a sales level of 4,000 units, sales is $75,000, variable expenses total $50,000, and fixed expenses are $21,000. What is the contribution margin per unit?

Answer 1

To calculate total revenue, multiply the selling price per unit by the number of units sold. The profit maximizing quantity is where marginal revenue equals marginal cost.

Step-by-step explanation:

To calculate the total revenue at each output level, you multiply the selling price per unit by the number of units sold. The total variable cost is the sum of the fixed cost and the variable cost per unit multiplied by the number of units sold. The marginal revenue is the change in total revenue when one additional unit is sold, while the marginal cost is the change in total cost when one additional unit is produced.

To calculate the profit maximizing quantity, you need to find the point where marginal revenue equals marginal cost. This is the quantity where the company maximizes its profit.

Answer 2

For Buffalo Co., at a sales level of 4,000 units, sales is $75,000, variable expenses total $50,000, and fixed expenses are $21,000. What is the contribution margin per unit? the answer is 5.00