Question

Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 20,000 Variable expenses 13,000 Contribution margin 7,000 Fixed expenses 3,780 Net operating income $ 3,220 Required: 1. What is the contribution margin per unit

Answer 1

$7

Step-by-step explanation:

Given: Sales volume= 1000 units.

Sales= $20000.

Variable expense= $13000.

Contribution margin= $7000.

Fixed expense= $3780

Net operating income= $3220.

Now, finding the contribution margin per unit.

Formula; Contribution margin per unit=
`((sales- variable\ expense))/(Number\ of\ sales\ units)`

⇒ Contribution margin per unit=
`((20000-13000))/(1000)`

⇒ Contribution margin per unit=
`(7000)/(1000)`

∴ Contribution margin per unit=
`\$ 7`

Hence, $7 is the contribution margin per unit.