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19 February, 21:03

Green Manufacturing Company produces a product that has a variable cost of $30 per unit. Fixed costs amount to $240,000. The selling price of the product is $36. The contribution margin per unit is:

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  1. 19 February, 22:49
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    The contribution margin per unit is $6.

    Explanation:

    Contribution margin is calculated by deducting all variable costs from the price of the product. It is used to calculate the products direct contribution in the earnings.

    Price of product = $36 per unit

    Cost of product = $30 per unit

    Contribution margin = Price - cost

    Contribution margin = $36 - $30

    Contribution margin = $6 per unit
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