Chapter 21, Problem S21.4SE

To determine

Contribution Margin:

Contribution Margin is the amount of sales after adjusting variable costs. Contribution Margin is calculated with the help of following formulas:

$\text{Contribution Margin per unit = Sales price – Variable cost per unit}$

$\text{Contribution Margin }\left(\text{\$}\right)\text{ = Total units sold× }\left(\text{Sales price – Variable cost per unit}\right)$

$\text{Contribution Margin }\left(\text{Ratio}\right)\text{ = }\frac{\text{Contribution Margin per unit}}{\text{Sales price per unit}}\times 100$

To determine:

The Contribution margin per unit, in total and as a ratio