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

Question

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

Quizplus · Accepted Answer

The contribution margin per unit is calculated as the selling price per unit minus the variable cost per unit: $5.00 - $3.00 = $2.00.

On Fire Company, a Producer of Salsa, Has the Following