Chapter 3, Problem 3.4Q

To determine

Contribution Margin:

Contribution margin is the excess of selling price over the variable costs of a product. It is a tool to evaluate the capability of the company to generate sufficient revenue so as to cover its variable cost.

Contribution Margin Per Unit:

Contribution margin is the excess of selling price per unit over the variable costs per unit of a product. It is a tool to evaluate the profitability of a given product.

Contribution Margin Percentage:

Contribution margin percentage is the excess of selling price over variable cost demonstrated in percentage.

To explain: Contribution margin, contribution margin per unit and contribution margin percentage.