Question

The Foundational 15 (Algo) [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6, LO5-7, LO5-8] [The following information applies to the questions displayed below.] 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 $ 10,000 Variable expenses 5,500 Contribution margin 4,500 Fixed expenses 2,250 Net operating income $ 2,250 Foundational 5-1 (Algo) Required: 1. What is the contribution margin per unit

Answer 1

4.50

Step-by-step explanation:

Calculation for the contribution margin per unit

Using this formula

Contribution margin per unit =

(Sales - Variable Expenses) / Sales volume units

Let plug in the formula

Contribution margin per unit =($10,000-$5,500)/1,000 units

Contribution margin per unit=$4,500/1,000 units

Contribution margin per unit=4.50

Therefore the Contribution margin per unit will be 4.50