If the selling price per unit is $50 and the contribution margin percentage is 40%, then the variable cost per unit must be $20.

Question

Quizplus · Accepted Answer

The contribution margin is calculated as the selling price per unit minus the variable cost per unit.

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

In this case, the contribution margin percentage is given as 40%.

Contribution Margin Percentage = (Contribution Margin / Selling Price per Unit) x 100%

40% = (Contribution Margin / $50) x 100%

Contribution Margin = $20

Now, we can use the above formula of contribution margin to calculate the variable cost per unit.

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

$20 = $50 - Variable Cost per Unit

Variable Cost per Unit = $30

Therefore, the statement "If the selling price per unit is $50 and the contribution margin percentage is 40%, then the variable cost per unit must be $20" is false.

If the Selling Price Per Unit Is $50 and the Contribution