Chapter 22, Problem E22.34E

To determine

Contribution margin per unit, total contribution margin and contribution margin ratio:

Contribution margin is the difference between sales and the variable cost. Contribution margin ratio can be defined as the difference between sales and variable cost expressed as the percentage of sales.

The formulas used to calculate contribution margin per unit is –

Contribution Margin per unit = Sale price per unit – Variable costs per unit

The formulas used to calculate total contribution margin is –

Total contribution margin = Contribution Margin per unit X Number of units

The formulas used to calculate contribution margin ratio is –

$Contributionmarginratio=\left(\frac{Contributionmargin}{SalesRevenue}\right)X100$

To determine:

Contribution margin per unit, total contribution margin and contribution margin ratio.