The Goldfarb Company manufactures and sells toasters.Each toaster sells for $23.75 and the variable cost per unit is $16.25.Goldfarb's total fixed costs are $25,000,and budgeted sales are 8,000 units.What is the contribution margin per unit?
A)$7.50.
B)$16.25.
C)$23.75.
D)$60,000.
E)$1.25.

Question

Quizplus · Accepted Answer

Contribution margin per unit = Selling price per unit - Variable cost per unit
= $23.75 - $16.25
= $7.50
The contribution margin is the amount left over after subtracting variable costs from sales revenue, and it is used to cover fixed costs and generate a profit.

The Goldfarb Company Manufactures and Sells Toasters