Zehms Inc. has a unit contribution margin of $30 and a contribution margin ratio of 60%. How much is the selling price of each unit?
A) $50
B) $75
C) $18
D) Cannot be determined without more information.

Question

Quizplus · Accepted Answer

Using the contribution margin formula, we get:

Contribution margin = Selling price - Variable cost per unit
60% = $30 / Selling price - Variable cost per unit

Solving for Selling price, we get:

Selling price = Variable cost per unit / (1 - Contribution margin ratio)
Selling price = $30 / 0.6 = $50

Therefore, the selling price of each unit is $50.

Zehms Inc Has a Unit Contribution Margin of $30 and a a Contribution