Kaiser's Kraft Korner sells a single product. 7,000 units were sold resulting in $70,000 of sales revenue, $28,000 of variable costs, and $12,000 of fixed costs.
Contribution margin per unit is:
[[selectone]]
a. $4
b. $6
c. $8.28
d. $4.29
ANSWER: CORRECT OPTION IS B
$6 ( Contribution margin per unit)
Please refer below workings
Contribution margin= Sales-variable cost
Contribution margin per unit = Selling price per unit - Variable cost per unit
Sales=$70,000
Units Sold=7000 units
Selling price per unit= (Sales Revenue/Units sold)
=70,000 / 7,000
=$10 per unit
Variable cost Per unit = (Total variable cost / Number of units sold)
=28,000/7,000
=$4 per unit
Contribution Magin per unit = Selling price per unit - Variable cost per unit
=$10-$4
=$6 per unit
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