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Margin Analysis:

a. Please calculate the contribution per unit for the appliance if it were sold at $299 via traditional retail stores.
A. $50
B. $75
C. $100
D. $125
b. Please calculate the contribution.
A. $50
B. $75
C. $100
D. $125

1 Answer

2 votes

Final answer:

The contribution per unit for the appliance sold at $299 via traditional retail stores is negative, indicating a loss rather than a contribution.

Step-by-step explanation:

To calculate the contribution per unit for the appliance, we need to subtract the variable cost per unit from the selling price per unit. We can use the information provided:

Fixed costs of production = $250
Marginal cost of producing the first unit = $700
Selling price at traditional retail stores = $299

Thus, the contribution per unit = Selling price per unit - Marginal cost per unit = $299 - $700 = $-401

Since the result is negative, it means that selling the appliance at $299 via traditional retail stores would result in a loss rather than a contribution. Therefore, none of the options provided (A, B, C, or D) are correct.

User Dhavenith
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