Elk Corp.has sales of $300,000,a contribution margin ratio of 40%,and a target profit of $30,000.If 20,000 units were sold,what is the variable cost per unit?
A)$22.50
B)$9.00
C)$6.00
D)$2.00

Question

Quizplus · Accepted Answer

The contribution margin ratio is 40%, meaning the contribution margin is 40% of sales. Therefore, the contribution margin is $300,000 * 0.40 = $120,000. The total variable costs are sales minus the contribution margin, which is $300,000 - $120,000 = $180,000. With 20,000 units sold, the variable cost per unit is $180,000 / 20,000 = $9.00.

Elk Corphas Sales of $300,000,a Contribution Margin Ratio of 40%,and a a Target