Question

Lindon Company is the exclusive distributor for an automotive product that sells for $31.50 per unit and has a CM ratio of 30%. The company’s fixed expenses are $187,110 per year. The company plans to sell 9,600 units this year. What are the variable expenses per unit?

Answer 1

$22.05

Step-by-step explanation:

Contribution margin = selling costs-variable costs

CM =30% of $31.50

=30/100 x 31.50

=0.3 x 31.50

=$9.45

Contribution margin is $9.45

Variable expenses = $31.50 - $9.45

=$22.05