Question

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. RST desires to earn a profit of $20,000. The contribution margin per unit is $

Answer 1

Answer:

$4

Explanation:

Contribution margin is the difference between sales and variable cost. As such, the contribution margin per unit is the difference between the sales per unit and the variable cost per unit.

Given that

variable cost per unit = $6

Selling price per unit = $10

The contribution margin per unit is

= $10 - $67

= $4