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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 1.Thecompanyhasproductioncostsof1. 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 $.

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Solution

To find the contribution margin per unit, we first need to determine the variable cost per unit.

  1. We know that half of the production costs are fixed costs, so the other half are variable costs. Therefore, the total variable costs are 600,000/2=600,000 / 2 = 300,000.

  2. Next, we divide the total variable costs by the number of units produced and sold to find the variable cost per unit. So, 300,000/750,000units=300,000 / 750,000 units = 0.40 per unit.

  3. The contribution margin per unit is calculated by subtracting the variable cost per unit from the selling price per unit. So, 1.001.00 - 0.40 = $0.60.

Therefore, the contribution margin per unit is $0.60.

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