30 January, 08:12

# Laner Company has the following data for the production and sale of 2,000 units. Sales price per unit \$800 per unit Fixed costs: Marketing and administrative \$400,000 per period Manufacturing overhead \$200,000 per period Variable costs: Marketing and administrative \$ 50 per unit Manufacturing overhead \$ 80 per unit Direct labor \$ 100 per unit Direct materials \$ 200 per unit What is the contribution margin per unit?

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1. 30 January, 08:39
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The contribution margin per unit is \$370

Explanation:

Contribution margin per unit is the amount that each additional unit sold contributes towards a company's fixed costs and profit and calculated by following formula:

Contribution Margin per Unit = Sales Price - Variable Cost per Unit

Variable Cost per Unit = Marketing and administrative cost per unit + Manufacturing overhead cost per unit + Direct labor cost per unit + Direct materials cost per unit = \$50 + \$80 + \$100 + \$200 = \$430

Contribution Margin per Unit = \$800 - \$430 = \$370