What is the contribution margin per unit given price 25 and variable cost 15?

What is the contribution margin per unit given price 25 and variable cost 15?

• A. 10
• B. 25
• C. 15
• D. 0

Answer: (D)

Contribution margin per unit is what’s left from the selling price after paying the variable cost for that unit. It’s calculated as price minus variable cost per unit. Here, 25 minus 15 equals 10. So the contribution margin per unit is 10. The other numbers would be the price itself (25), the variable cost (15), or zero only if price and variable cost were equal (which they are not in this case).

Contribution margin per unit is what’s left from the selling price after paying the variable cost for that unit. It’s calculated as price minus variable cost per unit.

Here, 25 minus 15 equals 10. So the contribution margin per unit is 10.

The other numbers would be the price itself (25), the variable cost (15), or zero only if price and variable cost were equal (which they are not in this case).