Question

EA2.

LO 3.1Calculate the per-unit contribution margin of a product that has a sale price of $400 if the variable costs per unit are $165.

Answer 1

Total contribution margin (CM) is calculated by subtracting total variable costs TVC from total sales TSP. Contribution margin per unit equals sales price per unit SP minus variable costs per unit VC .

So here we can calculate it as follow

Contribution per unit = Sales price - variable cost

= 400 -165

=235 dollars

So

Contribution per unit is $ 235.