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?
  1. $4
  2. $6
  3. $10
  4. $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.
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