Question


• E20-25 Computing contribution margin in total, per unit, and as a ratio Complete the table below for contribution margin pe
Number of units Sales price per unit Variable costs per unit 1,720 units $1,800 720 $ 4,500 3,600 4,620 units $5,550 1,665 Ca
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Answer #1

Case A:

Contribution margin per unit = Selling price per unit - Variable costs per unit
Contribution margin per unit = $1,800 - $720
Contribution margin per unit = $1,080

Total contribution margin = Contribution margin per unit * Number of units
Total contribution margin = $1,080 * 1,720
Total contribution margin = $1,857,600

Contribution margin ratio = Contribution margin per unit / Selling price per unit
Contribution margin ratio = $1,080 / $1,800
Contribution margin ratio = 60%

Case B:

Contribution margin per unit = Selling price per unit - Variable costs per unit
Contribution margin per unit = $4,500 - $3,600
Contribution margin per unit = $900

Total contribution margin = Contribution margin per unit * Number of units
Total contribution margin = $900 * 14,920
Total contribution margin = $13,428,000

Contribution margin ratio = Contribution margin per unit / Selling price per unit
Contribution margin ratio = $900 / $4,500
Contribution margin ratio = 20%

Case C:

Contribution margin per unit = Selling price per unit - Variable costs per unit
Contribution margin per unit = $5,550 - $1,665
Contribution margin per unit = $3,885

Total contribution margin = Contribution margin per unit * Number of units
Total contribution margin = $3,885 * 4,620
Total contribution margin = $17,948,700

Contribution margin ratio = Contribution margin per unit / Selling price per unit
Contribution margin ratio = $3,885 / $5,550
Contribution margin ratio = 70%

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