Answer:
Contribution margin per unit Footballs $6 per unit, Baseballs $7.2 per unit.
Baseball.
Explanation:
FootBalls:
Sale Price per unit = Sales / Units
Sale Price per unit = $60,000 / 4,000 units
Sale Price per unit = $15 per unit
Variable Cost per unit = Variable Cost / Units
Variable Cost per unit = $36,000 / 4,000
Variable Cost per unit = $9 per unit
Contribution Margin per unit = Sale Price per unit - Variable Cost per unit
Contribution Margin per unit = $15 per unit - $9 per unit
Contribution Margin per unit = $6 per unit
Baseballs:
Sale Price per unit = Sales / Units
Sale Price per unit = $25,000 / 2,500 units
Sale Price per unit = $10 per unit
Variable Cost per unit = Variable Cost / Units
Variable Cost per unit = $7,000 / 2,500
Variable Cost per unit = $2.8 per unit
Contribution Margin per unit = Sale Price per unit - Variable Cost per unit
Contribution Margin per unit = $10 per unit - $2.8 per unit
Contribution Margin per unit = $7.2 per unit
Contribution Margin per Unit tells Sandel that which product contribute higher in consuming fixed cost after contributing the variable cost from sales, in order to earn greater profit. Hence, Sandal should tell his people to emphasize on Baseball, as have, higher Contribution Margin per unit.
