Question

At its $35 selling price, Atlantic Company has sales of $35,000, variable manufacturing costs of $8,000, fixed manufacturing costs of $2,000, variable selling and administrative costs of $4,000 and fixed selling and administrative costs of $2,000. What is the company's contribution margin per unit?

Answer 1

Answer:

$23 per unit

Explanation:

Given that,

Selling price = $35

sales = $35,000,

variable manufacturing costs = $8,000,

Fixed manufacturing costs = $2,000,

Variable selling and administrative costs = $4,000

Fixed selling and administrative costs = $2,000

Number of units sold:

= Sales ÷ Selling price

= $35,000 ÷ $35

= 1,000

Contribution margin:

= Sales - Variable manufacturing costs - Variable selling and administrative costs

= $35,000 - $8,000 - $4,000

= $23,000

Contribution margin per unit:

= Contribution margin ÷ Number of units

= $23,000 ÷ 1,000

= $23 per unit