Question

Wenlowe Company had the following income statement for the most recent year:
Sales (17,000 units)........................ $357,000
Variable Expenses......................... 255,000
Contribution Margin. ... ................ $102,000
Fixed Expenses............ .................. 68,000
Net Operating Income . ................. $34,000
Given this data, the unit contribution margin was:__________
A. $2 per unit
B. $15 per unit
C. $6 per unit
D. $4 per unit

Answer 1

Answer:

C. $6 per unit

Explanation:

The contribution margin per unit is the amount contributed by each unit's sales revenue towards covering the fixed costs of the business after the variable cost per unit related to that product or business have been deducted. Thus, it is calculated as follows,

Contribution margin per unit = Selling price per unit - Variable cost per unit

As we are given the total contribution margin and we know the number of units, we can calculate the unit contribution margin by dividing the total contribution by the number of units.

Unit contribution margin  = 102000 / 17000

Unit contribution margin  = $6