Laner Company has the following data for the production and sale of 2,000 units. Sales price per unit $800 per unit Fixed costs: Marketing and administrative $400,000 per period Manufacturing overhead $200,000 per period Variable costs: Marketing and administrative $ 50 per unit Manufacturing overhead $ 80 per unit Direct labor $ 100 per unit Direct materials $ 200 per unit What is the contribution margin per unit?

Question

Business

Sariah Mcknight

31 December, 05:15

Laner Company has the following data for the production and sale of 2,000 units. Sales price per unit $800 per unit Fixed costs: Marketing and administrative $400,000 per period Manufacturing overhead $200,000 per period Variable costs: Marketing and administrative $ 50 per unit Manufacturing overhead $ 80 per unit Direct labor $ 100 per unit Direct materials $ 200 per unit What is the contribution margin per unit?

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Curtis Robbins · Answer 1

The contribution margin per unit is $370

Explanation:

Contribution margin per unit is the amount that each additional unit sold contributes towards a company's fixed costs and profit and calculated by following formula:

Contribution Margin per Unit = Sales Price - Variable Cost per Unit

Variable Cost per Unit = Marketing and administrative cost per unit + Manufacturing overhead cost per unit + Direct labor cost per unit + Direct materials cost per unit = $50 + $80 + $100 + $200 = $430

Contribution Margin per Unit = $800 - $430 = $370