Question

Kaiser's Kraft Korner sells a single product. 7,000 units were sold resulting in $70,000 of sales...

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

Business   Accounting   
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Answer #1

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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