The goldfarb company manufactures and sells toasters. each toaster sells for $23.75 and the variable cost per unit is $16.25. goldfarb's total fixed costs are $25,000, and budgeted sales are 8,000 units. what is the contribution margin per unit?

We calculate first for the revenue of the selling 8,000 units of toasters by multiplying 8,000 with the selling price per unit.

Revenue = (8,000) ($23.75/unit) = $190,000

Then, we calculate for the total variable cost as below,

Variable cost = (8,000) ($16.25/unit) = $130,000

Adding the variable cost and the fixed cost will give us a total cost of $155,000.

The contribution margin per unit is therefore,

Contribution margin per unit = (190,000 - 155,000) / 8,000 = $4.375.