A company's product sells at $12 per unit and has a $5 per unit variable cost. The company's total fixed costs are $98,000. The contribution margin per unit is:

Question

Quizplus · Accepted Answer

Contribution margin per unit = selling price per unit - variable cost per unit
= $12 - $5
= $7

The contribution margin is the amount that remains after subtracting variable costs from revenue. This contribution margin helps to cover the fixed costs and contributes towards the profit. Therefore, the contribution margin per unit for this company is $7.

A Company's Product Sells at $12 Per Unit and Has