Answer:
Variable cost per unit = $12
The total variable cost = $3,600,000
The total contribution margin = $6,900,000
Explanation:
Number of units produced = 300,000
Selling cost = $35
Revenue = 300,000 × $35
= $10,500,000
Fixed cost = $14 per unit
Total fixed cost = 300,000 × $14
= $4,200,000
Gross margin = $2,700,000
Gross margin is the difference between the Revenue earned and the total cost.
Total cost = $10,500,000 - $2,700,000
= $7,800,000
Total cost = Total Fixed cost + Total variable cost
Total variable cost = $7,800,000 - $4,200,000
= $3,600,000
Variable cost per unit is the ratio of the total variable cost to the number of units produced.
Variable cost per unit = $3,600,000/300000
= $12
Total contribution margin is the difference between the total revenue and the total variable cost.
Total contribution margin = Total revenue - Total variable cost
= $10,500,000 - $3,600,000
= $6,900,000
