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A unit sells for $25 and carries a variable cost of $10. What is the unit contribution margin?
A$10 per unit
B$15 per unit
C$25 per unit
D$8 per unit
Answer & Solution
Correct answer: B. $15 per unit
1. Unit contribution margin is the selling price of one unit minus the variable cost of one unit.
2. $25 minus $10 gives $15 per unit.
3. That $15 is what each sale leaves behind to pay down fixed costs.
4. $10 is the variable cost itself, which is the amount subtracted rather than the answer.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 5.2.1 Contribution Margin_
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