Question

In September, Coronado Company had the following financial statement amounts related to producing 520 units: Direct...

In September, Coronado Company had the following financial statement amounts related to producing 520 units:

Direct materials

$26800

Depreciation expense

11000

Sales revenue

95060

Direct labour

22500

Rent expense

24700


How much is the contribution margin per unit?

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Answer #1

Contribution margin = Sales revenue - Variable cost

Variable cost includes only those cost which are variable in nature. Rent expense and Depreciation are fixed in nature and therefore will not be included in the variable cost.

Variable cost will include direct material and direct labour

Contribution margin

= 95,060 - 26,800 - 22,500

= $45,760

Number of units sold = 520 units

Contribution margin per unit

= 45,760/520

= $88 per unit

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