Question

A company sells cupcakes for $4.25 each. If the variable costs are $1.95, what is the contribution margin

Answer 1

Answer:

Contribution margin per unit = $2.3

Explanation:

The contribution margin per unit is the contribution or amount provided by the sale of each unit towards covering the fixed costs of the business. The contribution margin per unit is calculated by subtracting the unit variable costs by the sales revenue per unit.

Contribution margin per unit =  Sales revenue per unit - Variable cost per unit

Contribution margin per unit = 4.25 - 1.95

Contribution margin per unit = $2.3