Question

A company has contribution margin per unit of $90 and a contribution margin ratio of 40%. What is the unit selling price?

a. Cannot be determined
b. $225
c. $36
d. $150

Answer 1

b. $225

Explanation:

The computation of unit selling price is shown below:-

unit selling price = Contribution margin per unit ÷ Contribution margin ratio

= $90 ÷ 40%

= $225 per unit

Therefore for computing the unit selling price we simply divide the contribution margin per unit by contribution margin ratio.

Hence, the unit selling price is $225

Therefore the option B is correct