The selling price of a unit is $20 and the variable product cost per unit is $14. In addition, a sales commission of 5% is paid on each sale. If the variable cost per unit $\textbf{ excluding }$ sales commission increases by 1%, what will be the new contribution margin?

Question

The selling price of a unit is $20 and the variable product cost per unit is $14. In addition, a sales commission of 5% is paid on each sale. If the variable cost per unit $\textbf{     excluding     }$ sales commission increases by 1%, what will be the new contribution margin?

Quizplus · Accepted Answer

$14 x 1.01 + $1 = $15.14; $20 -$15.14 = $4.86

The Selling Price of a Unit Is $20 and the Variable