Question

LO 3.1A company’s product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin per unit?

$40
$60
$90
$150

Answer 1

$90

Step-by-step explanation:

The formula and the computation of the contribution margin per unit are presented below:

Contribution margin per unit = Selling price per unit - variable cost per unit

= $150 - $60

= $90

If we deduct the variable cost per unit from the selling price per unit, then the contribution margin per unit can arrive

We only considered the selling price and the variable cost per unit