Question

Davidson Company has a product with a selling price per unit of $100, the unit variable cost is $60, and the total monthly fixed costs are $30,000. If the company sells 1,000 units, how much is Davidson’s contribution margin per unit?

Answer 1

Contribution margin per unit = $40

Step-by-step explanation:

Provided information we have,

Selling price of unit = $100

Variable cost per unit = $60

Total monthly fixed cost = $30,000

Number of units sold = 1,000

Contribution margin per unit = ?

Therefore, we know contribution margin per unit = Selling price per unit - Variable cost per unit = $100 - $60 = $40

Therefore, contribution for total units sold = $40
`*` 1,000 = $40,000

Final Answer

Contribution margin per unit = $40