The contribution margin per unit sold by Violin Division of Stringing Music Co is <u>$326</u>.
<h3>What is the contribution margin per unit?</h3>
The contribution margin per unit is the difference between the selling price per unit and the total variable costs (production and selling) per unit.
<h3>Data and Calculations:</h3>
Monthly demand and sales = 200 units
Per-Unit Costs
<h3>Variable production costs: </h3>
Direct materials $170
Direct labor 155
Variable factory overhead 75
Fixed production costs:
Depreciation (equipment) 15
Factory rent 58
Other 15
Total production cost = $488
Variable selling = $24
Fixed selling & administrative costs = $36 per unit
Selling price per unit = $750
<h3>Total variable cost per unit:</h3>
Direct materials $170
Direct labor 155
Variable factory overhead 75
Variable selling 24
Total variable production and selling costs = $424
Selling price per unit = $750
Contribution margin per unit = $326 ($750 = $424)
Thus, the contribution margin per unit sold is <u>$326</u>.
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<h3>Question Completion:</h3>
Variable selling & administrative costs $24 per unit Fixed selling & administrative costs $36 per unit Given a normal selling price per unit of $750, what is the contribution margin per unit sold
