Question

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. RST desires to earn a profit of $20,000. The sales level in units to achieve the desire profit is A company that sells multiple types of products has a selling price per composite unit of $150, variable cost per composite unit of $50 and total fixed costs of $25,000. The contribution margin per composite unit is:__________

Answer 1

Answer:

The correct answer is "12,500 units" and "$100 per unit".

Explanation:

Given:

Selling price,

= $10 per unit

Variable cost per unit,

= $6 per unit

Fixed cost,

= 30,000

Desired profit,

= 20,000

Now,

The contribution margin per unit will be:

= $Selling \ price - Variable \ cost$

= $10-6$

= $4$ ($) per unit

The required units will be:

= $\frac{(Fixed \ cost+Desired \ profit)}{Contribution \ margin}$

= $\frac{30000+20000}{4}$

= $\frac{50000}{4}$

= $12,500 \ units$

Now,

The contribution margin per composite unit will be:

= $Selling \ price-Variable \ cost$

= $150-50$

= $100$ ($) per unit