The selling price of one unit of products less the variable manufacturing expenses is the contribution margin per unit. The amount that each sale contributes to covering fixed costs is known as the contribution margin per unit. It will show the profit per unit sold once the fixed costs have been paid.
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How to find the Contribution
margin per unit and Contribution margin per welding hour?</h3>
Computation of Contribution margin per unit (Assuming Direct Labor exists Fixed cost)
Manufactured
Purchased WVD drums WVD drums Bike frames
Selling price $233.00 $233.00 $344.00
Variable costs:
Direct materials $201.00 $52.10 $112.00
Variable manufacturing overhead $0.00 $1.35 $1.90
Variable selling and administrative $0.75 $0.75 $3.40
Total variable cost 201.75 54.2 $117.30
Contribution margin per unit $31.25 $178.80 $226.70
Computation of Contribution margin per welding hour
Manufactured
WVD drums Bike frames
Contribution margin per unit $178.80 $226.70
Welding hours per unit 0.4 0.5
Contribution margin per welding hour $447.00 $453.40
Ranking 2 1
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