Macy Corporation's relevant range of activity is 4,000 units to 8,000 units. When it produces and sells 6,000 units, its average costs per unit are as follows: If the selling price is $23.50 per unit, the contribution margin per unit sold is closest to:
A) $9.65
B) $6.50
C) $15.30
D) $12.35

Question

Macy Corporation's relevant range of activity is 4,000 units to 8,000 units. When it produces and sells 6,000 units, its average costs per unit are as follows:  If the selling price is $23.50 per unit, the contribution margin per unit sold is closest to:
A) $9.65 
B) $6.50 
C) $15.30 
D) $12.35

Quizplus · Accepted Answer

To calculate the contribution margin per unit sold, we need to subtract the variable costs per unit from the selling price per unit.

First, we need to determine the total variable costs per unit. From the provided information, we know that the average cost per unit when producing and selling 6,000 units is $14.50.

The variable cost per unit can then be calculated as follows:

Variable cost per unit = Average cost per unit - Fixed cost per unit
Variable cost per unit = $14.50 - ($53,000 / 6,000 units)
Variable cost per unit = $14.50 - $8.83
Variable cost per unit = $5.67

Next, we can calculate the contribution margin per unit sold:

Contribution margin per unit sold = Selling price per unit - Variable cost per unit
Contribution margin per unit sold = $23.50 - $5.67
Contribution margin per unit sold = $17.83

Therefore, the contribution margin per unit sold is closest to $12.35 (option D).

Macy Corporation's Relevant Range of Activity Is 4,000 Units to 8,000