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A company with monthly fixed costs of $170,000 expects to earn monthly operating income of $25,000 by selling 6,500 units per month. What is the company's expected unit contribution margin? Select one: a. $30 per unit. b. The information given is insufficient to determine unit contribution margin. c. $26 per unit. d. $22 per unit.

Respuesta :

Samawati

Answer:

$30

Explanation:

Sales made after the break-even point contribute to the profits. By use of the cost volume profit concept, operating income can be calculated by adding fixed cost to desired income then dividing by the contribution margin by unit.

I.e., Operating income = fixed costs + desired income

    Contribution margin per unit

For this company,

Desired income = $25,000

Fixed cost = $170,000

Break even 6500 units

for this company

$25,000 = 6500units + $170,000

  CM

6500 units = $25,000 + $170,000

   CM

CM = $25,000 + $170,000

 6500  

CM =$195,000/6500

CM =$30

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