Question

A firm sells widgets for Rs14 each. The variable costs for each unit are Rs8. The contribution margin per unit is

Answer 1

Answer:

The contribution margin per unit is Rs6.

Answer 2

The contribution margin per unit is Rs.6

Given:

The selling price of Widget = Rs. 14

Variable costs for each unit = Rs.8

To Find:

The contribution margin per unit is

Solution:

The contribution margin is calculated as -

C = P - V

Where, -

C represents the margin of the unit

P represents the revenue of the unit

V represents the variable cost of the unit.

It displays the total income available after variable costs to pay for fixed expenditures and make a profit for the business.

As per the question, substituting the values -

C = 14 - 8

C = 6

Answer: The contribution margin per unit is Rs.6

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