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If a company has a marginal cost of $15 per unit and sells each unit for $25, wh

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Question: If a company has a marginal cost of $15 per unit and sells each unit for $25, what is the contribution margin per unit?

Options:

  1. $10
  2. $15
  3. $25
  4. $5

Correct Answer: $10

Solution: 

Contribution margin per unit is calculated as Selling Price ($25) minus Marginal Cost ($15), which equals $10.

If a company has a marginal cost of $15 per unit and sells each unit for $25, wh

Practice Questions

Q1
If a company has a marginal cost of $15 per unit and sells each unit for $25, what is the contribution margin per unit?
  1. $10
  2. $15
  3. $25
  4. $5

Questions & Step-by-Step Solutions

If a company has a marginal cost of $15 per unit and sells each unit for $25, what is the contribution margin per unit?
  • Step 1: Identify the selling price of each unit, which is $25.
  • Step 2: Identify the marginal cost of each unit, which is $15.
  • Step 3: Subtract the marginal cost from the selling price: $25 - $15.
  • Step 4: Calculate the result, which is $10.
  • Contribution Margin – The contribution margin per unit is the difference between the selling price of a product and its marginal cost, indicating how much each unit contributes to covering fixed costs and generating profit.
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