If a product sells for $20 and the variable costs are $14, then the per-unit contribution to fixed costs is $6.

Question

Quizplus · Accepted Answer

The contribution margin is calculated as the difference between the selling price and the variable costs:

Contribution Margin = Selling Price - Variable Costs
Contribution Margin = $20 - $14
Contribution Margin = $6

This means that for each unit sold, $6 is available to contribute towards fixed costs. Therefore, the per-unit contribution to fixed costs is indeed $6, making option A the correct answer.

If a Product Sells for $20 and the Variable Costs