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ABC Company sells several products. Information of average revenue and costs is as follows: Selling price per unit $34 Variable costs per unit: Direct material $6 Direct manufacturing labor $2.40 Manufacturing overhead $0.80 Selling costs $3.20 Annual fixed costs $78,000 The company sells 12,000 units at the end of the year. The contribution margin per unit is ________.

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Answer:

Contribution margin per unit= $21.6

Explanation:

Giving the following information:

Selling price per unit $34

Variable costs per unit:

Direct material $6

Direct manufacturing labor $2.40

Manufacturing overhead $0.80

Selling costs $3.20

The contribution margin is calculated by deducting from the selling price all the variable components:

Contribution margin per unit= selling price - total unitary variable cost

Contribution margin per unit= 34 - 6 - 2.4 - 0.8 - 3.2

Contribution margin per unit= $21.6

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