Question

Sunn Company manufactures a single product that sells for $180 per unit and whose variable costs are $135 per unit. The company’s annual fixed costs are $562,500____

(a) Compute the company's contribution margin per unit____

Answer 1

The contribution margin per unit for Sunn Company is calculated by subtracting the variable costs per unit from the selling price, resulting in a contribution margin of $45 per unit.

Step-by-step explanation:

The student has asked about the contribution margin per unit for Sunn Company, which manufactures a single product. To compute the contribution margin per unit, subtract the variable cost per unit from the selling price per unit. The formula to calculate this is:

Contribution Margin per Unit = Selling Price per Unit - Variable Cost per Unit

For Sunn Company, the selling price is $180 per unit and the variable costs are $135 per unit. Applying the formula:

Contribution Margin per Unit = $180 - $135 = $45

Thus, Sunn Company's contribution margin per unit is $45.