Question

Saul & Tyler Co. manufactures one product. The data that the financial accountant Filip provided is: The product sells for $50.00 and has variable costs of $24.00 per unit. Fixed costs are $260,000. They can buy a new production machine that will increase fixed costs by $11,400 per year, but will decrease variable costs by $3.50 per unit. Saul & Tyler want to know what the contribution margin per unit if the machine is purchased. Question 29 options: $22.50 $26.00 $29.50 $28.50 $27.50

Answer 1

Correct answer----------$ 29.50

Working

A	Sale Price per unit	$                   50.00
B	Variable Cost per Unit (24-3.50)	$                   20.50
C=A x B	Unit Contribution	$                   29.50