Question

Carver Corporation produces a product which sells for $40. Variable manufacturing costs are $18 per unit. Fixed manufacturing costs are $5 per unit based on the current level of activity, and fixed selling and administrative costs are $4 per unit. A selling commission of 15% of the selling price is paid on each unit sold. The contribution margin per unit is:

Answer 1

Answer:

$16

Explanation:

The computation of contribution margin per unit is shown below:-

For computing the contribution margin per unit first we need to find out the selling commission which is shown below:-

Selling commission = Sold product × Selling commission percentage

= $40 × 15%

= $6

Now, Contribution margin = Sales - Variable costs

=$40 - ($18 + $6)

= $40 - $24

=$16