Question

For a manufacturing company, selling price for an item is $580.00 per Unit, Variable cost is $302.00 per Unit, rent is $7,195.00 per month and insurance is $3000 per month. What is the contribution margin?

Answer 1

Contribution margin per unit = Selling price − Variable cost = $580.00 − $302.00 = $278.00 per unit.

Contribution margin ratio = $278 / $580 ≈ 0.4793 = 47.93%.