Hot Company, a producer of salsa, has the following information: $$\begin{array} { l r }
\text { Income tax rate } & 30 \% \
\text { Selling price per unit } & \$ 8.00 \
\text { Variable cost per unit } & \$ 3.00 \
\text { Total fixed costs } & \$ 90,000.00
\end{array}$$ The contribution margin per unit is _____.
A)$2.00
B)$3.00
C)$5.00
D)$8.00

Question

Hot Company, a producer of salsa, has the following information: $$\begin{array} { l r } 
\text { Income tax rate } & 30 \% \
\text { Selling price per unit } & \$ 8.00 \
\text { Variable cost per unit } & \$ 3.00 \
\text { Total fixed costs } & \$ 90,000.00
\end{array}$$ The contribution margin per unit is _____.
A)$2.00
B)$3.00
C)$5.00
D)$8.00

Quizplus · Accepted Answer

The contribution margin per unit is calculated as the selling price per unit minus the variable cost per unit, which is $8.00 - $3.00 = $5.00.

Hot Company, a Producer of Salsa, Has the Following Information