Question

Flannigan Company manufactures and sells a single product that sells for $450 per unit; variable costs are $270. Annual fixed costs are $800,000. Current sales volume is $4,200,000. Compute the contribution margin per unit.

Answer 1

Contribution margin per unit = $180

Step-by-step explanation:

The contribution margin per unit is the amount that each unit contributes towards covering the fixed costs of the company after the variable cost of each unit has been covered. It is calculated by deducting the variable cost per unit from the selling price per unit.

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

Contribution margin per unit = 450 - 270

Contribution margin per unit = $180