dillon company produces a product that sells for $120. a selling commission of 10% of the selling price is pain on each unit sold. variable manufacturing costs are $60 per unit. fixed manufaturing costs are $20 per unit based on the current level of activity, and fixed selling and administrative costs are $16 per unit. the unit cm is:

Question

25-10-2022
Business

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dillon company produces a product that sells for $120. a selling commission of 10% of the selling price is pain on each unit sold. variable manufacturing costs are $60 per unit. fixed manufaturing costs are $20 per unit based on the current level of activity, and fixed selling and administrative costs are $16 per unit. the unit cm is:

Answer :

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rafikiedu09 rafikiedu09 · Answer 1 · 2022-11-01T07:08:12-04:00

The contribution margin is $48 for each unit.

The contribution margin per unit is calculated as the selling price of a product divided by the variable manufacturing costs. The contribution margin per unit is the amount that each sale makes toward paying fixed costs. Once the fixed costs have been covered, the profit per unit sold will be displayed.

The margin of contribution per unit = Selling price - Variable cost per unit

Variable cost:

Selling commission = 4120 × 10%

= $12

Variable manufacturing cost = $60

Total variable cost = $12 + $60

= $72

Margin of contribution per unit = $120 - $72

= $48

To learn more about the Contribution margin

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