The net marketing contribution and marketing and sales expenses of a business are $2 million and $725,000,respectively.Calculate the margin per unit if the business produces 100,000 units.
A)27.2%
B)13%
C)31.6%
D)8.9%
E)22%

Question

Quizplus · Accepted Answer

The net marketing contribution is the difference between sales revenue and variable costs, which in this case is $2 million. Marketing and sales expenses are fixed costs amounting to $725,000. The margin per unit can be calculated by subtracting the fixed costs from the net marketing contribution and then dividing by the number of units. So, ($2,000,000 - $725,000) / 100,000 = $12.75 per unit. To find the percentage, we divide the margin per unit by the sales price per unit. However, since the sales price per unit is not provided, we assume the calculation is based on the margin per unit in dollar terms, which was a misunderstanding in the question's phrasing. The correct calculation for the margin percentage should involve the net marketing contribution margin, which is ($2,000,000 - $725,000) / $2,000,000 = 63.75%. However, none of the options match this calculation, indicating a misunderstanding in the question's setup or the expected calculation method. Given the options and the information provided, calculating the exact margin per unit percentage as per the options is not straightforward without additional information on sales price per unit.

The Net Marketing Contribution and Marketing and Sales Expenses of a Business