Question

A cement manufacturer has supplied the following data:

Answer 1

Answer:

$2.3 per unit

Explanation:

Calculation for company's unit contribution margin

First step is to calculate the Contribution margin using this formula

Contribution margin = Sales revenue - Variable manufacturing expenses - Variable selling and administrative expenses

Let plug in the formula

Contribution margin = $1,010,500 - $416,000 - $54,000

Contribution margin = $540,500

Now let calculate the Contribution margin per unit using this formula

Contribution margin per unit = Contribution margin / Cement tons

Contribution margin per unit = $540,500 / 235,000

Contribution margin per unit =$2.3 per unit.

Therefore company's unit contribution margin is $2.3 per unit