Question

A division sold 200,000 calculators during the year. Their data for the division is below. How much is the unit contribution margin? *

Answer 1

Unit Contribution Margin = $6.50

Missing Problem Statement:

Sales $2,000,000

Variable costs:

Materials $380,000

Order processing $150,000

Billing labor $110,000

Selling expenses $60,000

Total variable costs $700,000

Fixed costs $1,000,000

Explanation:

Given : Total number of calculators sold = 200,000

First we will find the contribution margin for the whole sale, so:

Contribution Margin = Sales - Variable Cost

Contribution Margin = 2000000-700000

Contribution Margin =$ 1,300,000

Now for unit contribution margin :

Unit Contribution Margin =
`(Contribution.Margin)/(Total.number.of.Calculators.Sold)`

Unit Contribution Margin =
`(1300000)/(200000)`

Unit Contribution Margin = $6.50