Question

A division sold 280,000 calculators during 2016: Sales $5,600,000 Variable costs: Materials $1,400,000 Order processing 280,000 Billing labour 1,120,000 Delivery costs 840,000 Selling expenses 560,000

Total variable costs 4,200,000 Fixed costs 750,000

How much is the contribution margin per unit, rounded to the nearest cent?

Answer 1

Ans:

Contribution margin per unit is the excess of sales over variable cost and which is further utilised to recover fixed cost. Contribution margin is calculated to check whether product is able to recover cost which are directly related to such prioduct.

Contribution Margin = Sales- Total variable cost.

Calculation of Contribution Margin
Particulates	Units	Amount in $	Amount per unit
Sales	280000	5600000	20
Variable cost:
Material		1400000	5
Order Processing		280000	1
Billing Labor		1120000	4
Delivery Cost		840000	3
Selling Expense		560000	2
Total Variable cost		4200000	15
Contribution Margin		1400000	5