A recent income statement of Hendrix Inx. reported sales revenue of $5,000,000, variable costs of $3,000,000, and fixed costs of $1,000,000. If these data are based on the sale of 40,000 units, the contribution margin per unit would be:
A)$25.
B)$50.
C)$75.
D)$100.
E)$200.

Question

Quizplus · Accepted Answer

Contribution Margin per Unit = Sales Price per Unit - Variable Cost per Unit

We can calculate the sales price per unit by dividing total sales revenue by the number of units sold:

Sales Price per Unit = Sales Revenue / Number of Units Sold
Sales Price per Unit = $5,000,000 / 40,000 units
Sales Price per Unit = $125

Using the same logic, we can calculate the variable cost per unit by dividing the total variable costs by the number of units sold:

Variable Cost per Unit = Variable Costs / Number of Units Sold
Variable Cost per Unit = $3,000,000 / 40,000 units
Variable Cost per Unit = $75

Now we can use the formula to calculate contribution margin per unit:

Contribution Margin per Unit = Sales Price per Unit - Variable Cost per Unit
Contribution Margin per Unit = $125 - $75
Contribution Margin per Unit = $50

Therefore, the contribution margin per unit is $50 per unit. The correct answer is B.

A Recent Income Statement of Hendrix Inx