victorlyh1990
Oct 7, 2012, 01:11 AM
Based on the information provided below, calculate the contribution margin per unit.
Units sold 2,000
Selling price per unit $5.00
Direct labour costs $3,000
Raw materials costs $2,000
Machinery cost $2,500
ebaines
Oct 8, 2012, 10:47 AM
Contribution margin is revenue minus variable costs of manufacture (costs that are incurred with every unit sold). It does not include overhead costs that you incur regardless of how many units you make - such as capital expenses and depreciation, real estate taxes, R&D expenses, etc. So from the list of expenses you provided, can you tell us which ought to be included in the contribution analysis? Contribution margin per unit is the contribution divided by number of units sold.