Question

Wang co. manufactures and sells a single product that sells for $420 per unit; variable costs are $231 per unit. annual fixed costs are $909,000. current sales volume is $4,220,000. compute the contribution margin per unit.

Answer 1

The contribution margin per unit is 4809.52.

What is the contribution margin?

Contribution margin is the level of output at which revenue would equal zero.

Contribution margin = fixed cost / (price - variable cost)  

909,000 / (420 - 231)

909,000 / 189 = 4809.52

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