Question

A jeans maker is designing a new line of jeans called Slams. Slams will sell for $290 per unit and cost $182.70 per unit in variable costs to make. Fixed costs total $68,500. (Round your answers to 2 decimal places.)

Compute the contribution margin per unit.

Answer 1

The contribution margin per unit is $107.30.

Step-by-step explanation:

The contribution margin per unit can be calculated by subtracting the variable cost per unit from the selling price per unit. In this case, the selling price is $290 per unit and the variable cost is $182.70 per unit. Subtracting the variable cost from the selling price, we get:

Contribution margin per unit = Selling price per unit - Variable cost per unit
Contribution margin per unit = $290 - $182.70
Contribution margin per unit = $107.30