Carver Company produces a product which 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. The contribution margin per unit is:

Question

Quizplus · Accepted Answer

The contribution margin per unit is calculated as the selling price minus variable costs (variable manufacturing costs and selling commission). The selling commission is 10% of $30, which is $3. Therefore, the contribution margin is $30 - $15 - $3 = $12.

Carver Company Produces a Product Which Sells for $30