Carver Company produces a product that sells for $30.Variable manufacturing costs are $15 per unit.Fixed manufacturing costs are $5 per unit based on the current level of activity,and fixed selling and administrative costs are $4 per unit.A selling commission of 10% of the selling price is paid on each unit sold.What is the contribution margin per unit?

Question

Quizplus · Accepted Answer

The contribution margin per unit is calculated by subtracting all variable costs from the selling price. Here, the variable costs include the variable manufacturing costs ($15), the selling commission (10% of $30, which is $3), and there are no variable fixed costs mentioned. So, the total variable costs are $15 + $3 = $18. Subtracting this from the selling price ($30 - $18) gives a contribution margin of $12 per unit. Fixed manufacturing and selling/administrative costs do not affect the contribution margin per unit calculation directly.

Carver Company Produces a Product That Sells for $30