Goldfarb Company manufactures and sells toasters. Each toaster sells for $24.15 and the variable cost per unit is $16.30. Goldfarb's total fixed costs are $25,400, and budgeted sales are 8,400 units. What is the contribution margin per unit?

$7.85

Explanation:

Provided that

Selling price per unit = $24.15

Variable cost per unit = $16.30

Total fixed cost = $25,400

Budgeted sales 8,400 units

The formula to compute the contribution margin per unit is as follows

Contribution margin per unit = Selling price per unit - Variable expense per unit

= $24.15 - $16.30

= $7.85

By deducting the variable cost per unit from the selling price per unit we can find out the contribution margin per unit

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