A project has expected sales of 54,000 units, ±5 percent, variable cost per unit of $87, ±2 percent, fixed costs of $287,000, ±1 percent, and a sales price per unit of $219, ±2 percent. The depreciation expense is $47,000 and the tax rate is 23 percent. What is the contribution margin per unit for a sensitivity analysis using a variable cost per unit of $85?
A) $132
B) $134
C) $135
D) $136
E) $133

Question

Quizplus · Accepted Answer

The contribution margin per unit is calculated as the sales price per unit minus the variable cost per unit. Given a variable cost per unit of $85, the contribution margin per unit is $219 - $85 = $134.

A Project Has Expected Sales of 54,000 Units, ±5 Percent