Schuppener Company sells its only product for $18 per unit; variable production costs are $6 per unit, and variable selling and administrative costs are $3 per unit; fixed costs for 10,000 units are $10,000.The contribution margin is
A)$12 per unit.
B)$9 per unit.
C)$11 per unit.
D)$8 per unit.
E)$18 per unit.

Question

Quizplus · Accepted Answer

Contribution margin = Sales price per unit – Variable costs per unit
= $18 - ($6 + $3)
= $9 per unit

Total contribution margin for 10,000 units = $9 x 10,000 = $90,000

Since the fixed cost is already incurred, it is not considered in the calculation of contribution margin. Therefore, the contribution margin per unit is $9.

Schuppener Company Sells Its Only Product for $18 Per Unit;