Question

Wang Co. manufactures and sells a single product that sells for $650 per unit; variable costs are $390 per unit. Annual fixed costs are $880,000. Current sales volume is $4,400,000. Compute the contribution margin per unit.

Answer 1

Answer:

40 %

Explanation:

Contribution Margin = Contribution ÷ Sales

Where,

Contribution = Sales - Variable Costs

                     = $650 - $390

                     = $260

Therefore,

Contribution Margin = $260 ÷ $650

                                 = 0.40 or 40 %