Question

Zeke Company sells 26,500 units at $15 per unit. Variable costs are $7 per unit, and fixed costs are $34,800. The contribution margin ratio and the unit contribution margin are

O 53% and $8 per unit
O 1% and $15 per unit
O 53% and $15 per unit
O 1% and $7 per unit

Answer 1

The correct answer is option "53% and $8 per unit", where the unit contribution margin is $15 minus $7, and the contribution margin ratio is this margin divided by the selling price per unit.

Step-by-step explanation:

The correct answer is option "53% and $8 per unit". Given the information, the unit contribution margin is calculated as the selling price per unit minus the variable cost per unit, which is $15 - $7 = $8 per unit.

The contribution margin ratio is then found by dividing the unit contribution margin by the selling price per unit, resulting in $8 / $15 = 0.5333 or 53% when expressed as a percentage.

This is a critical concept in cost accounting and financial analysis as it helps businesses understand how much each unit contributes to covering the fixed costs and generating profit.

The correct answer is option O 53% and $15 per unit.

To find the contribution margin ratio, divide the contribution margin by the sales price per unit. The contribution margin is calculated by subtracting the variable cost per unit from the sales price per unit: $15 - $7 = $8. So, the contribution margin ratio is $8 / $15 = 53%.

The unit contribution margin is simply the contribution margin per unit, which is $8 per unit.