Contribution Margin Analysis – Short Answer

Practice Question

Intro to Managerial Accounting
Decision-Making: Cost-Volume-Profit Analysis
Contribution Margin Analysis
Short Answer

If a product sells for $80 and has variable costs of $30, what is the contribution margin per unit?

Answer +
Correct Answer: $50
Explanation +

Contribution Margin per Unit = Selling Price – Variable Cost = $80 – $30 = $50.

This is essential for understanding how much each unit sold contributes to covering fixed costs (Page 47).