A business sells a product with variable costs per unit of $30.Fixed costs are $10,000 per period.The selling price per unit is $100.Assuming 1,000 units are sold in a period,what is the contribution margin for the period?
A) $30,000.
B) $60,000.
C) $70,000.
D) $100,000.

Question

Quizplus · Accepted Answer

Contribution margin per unit = selling price per unit - variable cost per unit
Contribution margin per unit = $100 - $30 = $70

Contribution margin for 1,000 units = 1,000 * $70 = $70,000

Contribution margin is the amount left over to contribute towards covering fixed costs and then profit after variable costs are deducted from sales revenue. So, the contribution margin for the period would be $70,000.

A Business Sells a Product with Variable Costs Per Unit