Reid Manufacturing provides the following information about their product:Selling price per unit$200Variable manufacturing costs per unit$ 50Fixed manufacturing costs per unit$ 60Variable selling costs per unit$ 40Fixed selling costs per unit$ 20Expected production and sales800 unitsContribution margin per unit is:Question 10Select one:a.$30b.$90c.$110d.$150e.None of these is correct
Question
Reid Manufacturing provides the following information about their product:Selling price per unit 50Fixed manufacturing costs per unit 40Fixed selling costs per unit30b.110d.$150e.None of these is correct
Solution
The contribution margin per unit is calculated by subtracting the variable costs (both manufacturing and selling) from the selling price per unit.
Here's how you can calculate it:
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First, add up the variable costs per unit. In this case, the variable manufacturing cost is 40. So, the total variable cost per unit is 40 = $90.
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Next, subtract this total variable cost from the selling price per unit to find the contribution margin per unit. The selling price per unit is 200 - 110.
So, the correct answer is c. $110.
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