Answered: Sales revenue (1000 units) $20,000…

Sales revenue (1000 units) $20,000 Fixed costs $29,000 Contribution margin ration 60%, what is the variable cost per unit?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Sales revenue (1000 units) $20,000

Fixed costs $29,000

Contribution margin ration 60%, what is the variable cost per unit?

Expert Solution

Step 1 Introduction

The contribution margin is calculated as difference between sales and variable costs. The break even sales are calculated as fixed cost divided by contribution margin ratio.

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