Question

Oslo Co prepared the following Contribution Format income statement based on sales volume of 1,000 units. (the relevant rage of production is 500 to 1500 units):

Sales 80,000
Var C 52,000
CM 28,000
Fixed 21,840
NOI 6,160

What is the CM per unit?

Answer 1

The Contribution Margin (CM) per unit is calculated as \$28,000 total CM divided by 1,000 units sold, resulting in \$28 per unit.

Step-by-step explanation:

The student has asked for the calculation of the Contribution Margin (CM) per unit based on the given income statement. To calculate the CM per unit, we should follow the formula: Contribution Margin (CM) = Sales - Variable Costs (VC). Given that the sales were \$80,000 and the variable costs were \$52,000 for a volume of 1,000 units, the total Contribution Margin (CM) is \$28,000. To find the CM per unit, we divide the total CM by the number of units sold, which in this case is 1,000 units. Thus, CM per unit = \$28,000 / 1,000 units = \$28 per unit.