Answer:
Contribution margin per unit = $450
Contribution margin ratio = 52.94%
Explanation:
The calculations are given below:
Contribution margin per unit = Selling price per unit - per unit variable cost
= $850 - $400
= $450
Contribution margin ratio would be
= (Contribution margin per unit) ÷ (Selling price per unit) × 100
= ($450) ÷ ($850) × 100
= 52.94%
And, the contribution margin income statement for August month is presented below:
Contribution margin income statement
For the August month
Sales (425 motors × $850) $361,250
Less: Variable cost (425 motors × $400) ($170,000)
Contribution margin $191,250
Less: Fixed expenses per month ($90,000)
Net income $101,250
