Question: If the selling price is $300 and the variable cost is $180, what is the contribution margin per unit?
Options:
$120
$180
$300
$60
Correct Answer: $120
Solution:
Contribution Margin per Unit = Selling Price - Variable Cost = $300 - $180 = $120.
If the selling price is $300 and the variable cost is $180, what is the contribu
Practice Questions
Q1
If the selling price is $300 and the variable cost is $180, what is the contribution margin per unit?
$120
$180
$300
$60
Questions & Step-by-Step Solutions
If the selling price is $300 and the variable cost is $180, what is the contribution margin per unit?
Step 1: Identify the selling price, which is $300.
Step 2: Identify the variable cost, which is $180.
Step 3: Use the formula for contribution margin per unit: Contribution Margin = Selling Price - Variable Cost.
Step 4: Substitute the values into the formula: Contribution Margin = $300 - $180.
Step 5: Calculate the result: $300 - $180 = $120.
Contribution Margin – The contribution margin per unit is the difference between the selling price and the variable cost, indicating how much each unit contributes to covering fixed costs and generating profit.
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