Question

Lin Corporation has a single product whose selling price is $140 per unit and whose variable expense is $70 per unit. The company's monthly fixed expense is $32,500. What is the contribution margin per unit?

Answer 1

The contribution margin per unit for Lin Corporation is $70, which is derived by subtracting the variable expense of $70 from the selling price of $140.

Step-by-step explanation:

The contribution margin per unit is calculated by subtracting the variable expense per unit from the selling price per unit. Given Lin Corporation's selling price of $140 and variable expense of $70 per unit, the contribution margin per unit is:

$140 (selling price) - $70 (variable expense) = $70 contribution margin per unit

This means that for each unit sold, Lin Corporation contributes $70 towards covering its fixed expenses and then to profit.