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Green Manufacturing Company produces a product that has a variable cost of$30 per unit. Fixed costs amount to $240,000. The selling price of the product is $36. The contribution margin per unit is:

a. $66
b. $36
c. $30
d. none of the above

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Answer:

The contribution margin per unit is: $6 d. none of the above

Explanation:

Contribution margin per unit is the amount that each additional unit sold contributes towards a company’s fixed costs and profit and calculated by following formula:

Contribution Margin per Unit = Sales Price per unit – Variable Cost per Unit

Green Manufacturing Company produces a product that has a variable cost of $30 per unit. The selling price of the product is $36.

Contribution Margin per Unit = $36 - $30 = $6

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