We calculate first for the revenue of the selling 8,000
units of toasters by multiplying 8,000 with the selling price per unit.
<span> Revenue =
(8,000)($23.75/unit) = $190,000</span>
Then, we calculate for the total variable cost as below,
<span> Variable cost =
(8,000)($16.25/unit) = $130,000</span>
Adding the variable cost and the fixed cost will give us
a total cost of $155,000.
The contribution margin per unit is therefore,
<span>
Contribution margin per unit = (190,000 – 155,000) / 8,000 = $4.375. </span>
