Gena Manufacturing Company has a fixed cost of $225,000 for the production of tubes. Estimated sales are 150,000 units. A before tax profit of $125,000 is desired by the controller. If the tubes sell for $5 each, what unit contribution margin is required to attain the profit target?
A) $3.00.
B) $2.33.
C) $1.47.
D) $0.90.

Question

Quizplus · Accepted Answer

To find the unit contribution margin, use the formula: (Fixed Costs + Desired Profit) / Estimated Sales. Here, ($225,000 + $125,000) / 150,000 units = $2.33.

Gena Manufacturing Company Has a Fixed Cost of $225,000 for the Production