Question: If the selling price per unit is $10 and the marginal cost per unit is $6, what is the contribution margin per unit?
Options:
$4
$6
$10
$2
Correct Answer: $4
Solution:
Contribution margin per unit = Selling price - Marginal cost = $10 - $6 = $4.
If the selling price per unit is $10 and the marginal cost per unit is $6, what
Practice Questions
Q1
If the selling price per unit is $10 and the marginal cost per unit is $6, what is the contribution margin per unit?
$4
$6
$10
$2
Questions & Step-by-Step Solutions
If the selling price per unit is $10 and the marginal cost per unit is $6, what is the contribution margin per unit?
Step 1: Identify the selling price per unit, which is $10.
Step 2: Identify the marginal cost per unit, which is $6.
Step 3: Use the formula for contribution margin per unit: Contribution margin = Selling price - Marginal cost.
Step 4: Substitute the values into the formula: Contribution margin = $10 - $6.
Step 5: Calculate the result: $10 - $6 = $4.
Contribution Margin – The contribution margin per unit is the difference between the selling price and the marginal cost, indicating how much each unit sold contributes to covering fixed costs and generating profit.
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