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27 May, 16:55

Zahn company manufactures a product that sells for $120. a selling commission of 10% of the selling price is paid on each unit sold. variable manufacturing costs are $60 per unit. fixed manufacturing costs are $20 per unit based on the current level of activity, and fixed selling and administrative costs are $16 per unit. what is the contribution margin per unit?

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  1. 27 May, 19:19
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    The contribution margin is the difference between sales volume and variable costs.

    Or to put it another way: the contribution margin is the profits of a company, without considering the fixed costs.

    We have then:

    MC = $ 120 - 60 $ = $ 60

    Answer:

    the contribution margin per unit is $ 60
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