Gardner Manufacturing Company produces 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. The contribution margin per unit is:

Question

Gardner Manufacturing Company produces 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. The contribution margin per unit is:

Answer 1

Sales. $120

variable manufacturing $60
Selling cost (120*10) 12 72
Contribution margin. $48

Answer 2

Well, well, well! Looks like it's time for some number crunching! Let's calculate that contribution margin together.

The selling price per unit is $120. From that, a 10% selling commission, which is $12 (10% of $120), is paid. So we subtract $12 from $120 and get $108.

Now, let's calculate the variable manufacturing costs per unit, which are $60.

If we add the variable manufacturing costs to the selling price after deducting the selling commission, we get:

$108 - $60 = $48.

But hold on a second! We're not done yet!

We still need to subtract the fixed manufacturing costs of $20 and the fixed selling and administrative costs of $16 per unit:

$48 - $20 - $16 = $12.

Voilà! The contribution margin per unit is $12.

I hope that put a smile on your face!

Answer 3

To find the contribution margin per unit, we need to subtract the variable costs per unit from the selling price per unit.

Variable costs per unit = $60
Selling price per unit = $120

Contribution margin per unit = Selling price per unit - Variable costs per unit
Contribution margin per unit = $120 - $60
Contribution margin per unit = $60

Therefore, the contribution margin per unit is $60.

Answer 4

To find the contribution margin per unit, we need to subtract the variable costs per unit from the selling price per unit.

The variable costs per unit of Gardner Manufacturing Company are given as $60 per unit.

The selling price per unit is given as $120.

Therefore, the contribution margin per unit can be calculated as:

Contribution Margin per Unit = Selling Price per Unit - Variable Costs per Unit
= $120 - $60
= $60

So, the contribution margin per unit for Gardner Manufacturing Company is $60.