The income statement for Thomas Manufacturing Company is as follows: $$\begin{array} { l r }
\text { Sales (10,000 units) } & \$ 120,000 \
\text { Variable expenses } & \underline{72,000} \
\text { Contribution margin } & \$ 48,000 \
\text { Fixed expenses } &\underline{ 36,000 }\
\text { Operating incame } &\underline{ \$12,000}
\end{array}$$ What is the contribution margin per unit?

Question

The income statement for Thomas Manufacturing Company is as follows: $$\begin{array} { l r } 
\text { Sales (10,000 units) } & \$ 120,000 \
\text { Variable expenses } & \underline{72,000} \
\text { Contribution margin } & \$ 48,000 \
\text { Fixed expenses } &\underline{ 36,000 }\
\text { Operating incame } &\underline{ \$12,000}
\end{array}$$ What is the contribution margin per unit?

Quizplus · Accepted Answer

The contribution margin is the difference between sales and variable expenses. Here, it's $48,000 for 10,000 units, so per unit, it's $48,000 / 10,000 units = $4.80.

The Income Statement for Thomas Manufacturing Company Is as Follows