Question

Mary's Lamps single product has a selling price of $25 per unit and contribution margin of $10. Last year the company reported a profit of $20,000 and variable expenses totaling $180,000. How many units did the company sell last year?

Answer 1

The number of units sold in the last year

Contribution margin per unit

Contribution margin per unit = Selling price per unit – Variable cost per unit

$10.00 per unit = $25.00 per unit - Variable cost per unit

Variable cost per unit = $25.00 per unit - $10.00 per unit

Variable cost per unit = $15.00 per unit

Number of units sold in the last year

Total variable cost = Number of units sold x Variable cost per unit

$180,000 = Number of units sold x $15.00 per unit

Number of units sold = $180,000 / $15.00 per unit

Number of units sold = 12,000 Units

“Hence, the Number of units sold in the last year will be 12,000 Units”