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alexandr1967 [171]
3 years ago
10

Kent Manufacturing produces a product that sells for $64.00 and has variable costs of $35.00 per unit. Fixed costs are $348,000.

Kent can buy a new production machine that will increase fixed costs by $20,500 per year, but will decrease variable costs by $4.50 per unit.
Required:
Compute the contribution margin per unit if the machine is purchased.
Business
1 answer:
DedPeter [7]3 years ago
7 0

Answer:

The contribution margin per unit is $33.50

Explanation:

The contribution margin per unit in the case when the machine is purchased is shown below:

= Selling price per unit - variable cost per unit

= $64 - ($35 - $4.50)

= $64 - $30.50

=  $33.50

hence, the contribution margin per unit is $33.50 and the same is to be considered

We simply applied the above formula

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