At its 34 selling price Atlantic Company has sales of 34000

At its $34 selling price, Atlantic Company has sales of $34,000, variable manufacturing costs of $5,000, fixed manufacturing costs of $2,000, variable selling and administrative costs of $5,000 and fixed selling and administrative costs of $2,000. What is the company\'s contribution margin per unit?

Solution

Step-1:Calculation of number of units sold Total Sales $       34,000 / Selling price per unit $ 34 Number of units sold 1,000 Step-2:Calculation of variable cost per unit Variable Manufacturing cost $         5,000 variable selling and administrative costs $         5,000 Total variable costs $       10,000 / Number of units sold 1,000 Variable cost per unit $         10.00 Step-3:Calculation of contribution margin per unit Selling Price per unit $ 34 Less Variable cost per unit $ 10 Contribution margin per unit $ 24