Fill in the Blank QuestionFill in the blank question.LMN Company produces a product that sells for $1. The company has production costs of $600,000, half of which are fixed costs. Assuming production and sales of 750,000 units, the contribution margin per unit is $.
Question
Fill in the Blank QuestionFill in the blank question.LMN Company produces a product that sells for 600,000, half of which are fixed costs. Assuming production and sales of 750,000 units, the contribution margin per unit is $.
Solution
To find the contribution margin per unit, we first need to determine the variable cost per unit.
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We know that half of the production costs are fixed costs, so the other half are variable costs. Therefore, the total variable costs are 300,000.
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Next, we divide the total variable costs by the number of units produced and sold to find the variable cost per unit. So, 0.40 per unit.
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The contribution margin per unit is calculated by subtracting the variable cost per unit from the selling price per unit. So, 0.40 = $0.60.
Therefore, the contribution margin per unit is $0.60.
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