Pedregon Corporation has provided the following information: If the selling price is $20.60 per unit, the contribution margin per unit sold is closest to:
A) $4.05
B) $6.00
C) $7.95
D) $10.50

Question

Pedregon Corporation has provided the following information:  If the selling price is $20.60 per unit, the contribution margin per unit sold is closest to:
A) $4.05 
B) $6.00 
C) $7.95 
D) $10.50

Quizplus · Accepted Answer

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

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

From the given information:

Variable Expenses per Unit = Direct Materials per Unit + Direct Labor per Unit + Variable Overhead per Unit

Variable Expenses per Unit = $4.50 + $5.40 + $3.75 = $13.65

Contribution Margin per Unit = $20.60 - $13.65 = $6.95

Therefore, the closest answer choice is C) $7.95.

Pedregon Corporation Has Provided the Following Information: If the Selling