Question

Saxon Company sold 16,000 units for $84,000. Variable costs per unit sold were $3. Saxon had $28,000 of fixed costs. How much was the per unit contribution margin

Answer 1

• All working forms part of the answer
• Amounts are in ‘$’
• Contribution margin is calculated by subtracting Variable cost components from Sales Revenues
• Hence, Contribution margin = Sales – Variable Cost
• Working

	Units	Per unit (in $)	Amount (in $)
Sales	16000	5.25	84000
(Less): Variable Costs	16000	3	48000
Contribution Margin	16000	2.25	36000
(Less): Fixed Cost			28000
Net Income			8000

• Answer

Total Contribution Margin [calculated above]	$36000
Total Units Sold	16000
Per unit Contribution Margin	$2.25