The records of the Dodge Corporation show the following results for the most recent year: Given these data, the unit contribution margin was:
A)$16
B)$4
C)$2
D)$6

Question

The records of the Dodge Corporation show the following results for the most recent year:  Given these data, the unit contribution margin was:
A)$16 
B)$4 
C)$2 
D)$6

Quizplus · Accepted Answer

The unit contribution margin can be calculated by subtracting variable costs from the selling price of one unit.

Unit contribution margin = Selling price per unit - Variable cost per unit

From the given data, we know that the total revenue was $120,000 (10,000 units sold x $12 selling price per unit) and the total variable cost was $60,000.

Unit contribution margin = (Total revenue / Number of units sold) - (Total variable cost / Number of units sold)

Unit contribution margin = ($120,000 / 10,000 units) - ($60,000 / 10,000 units)

Unit contribution margin = $12 - $6

Unit contribution margin = $6

Therefore, the unit contribution margin was $6 per unit.

The answer is D.

The Records of the Dodge Corporation Show the Following Results