Learning Objective $05-$A$1$: Compute the contribution margin and describe what it reveals about a company$$s cost structure.

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Contribution margin per unit is a product$$s selling price less its total variable costs. Contribution margin ratio is a product$$s contribution margin per unit divided by its selling price. Unit contribution margin is the amount received from each sale that contributes to fixed costs and income. The contribution margin ratio reveals what portion of each sales dollar is available as contribution to fixed costs and income.

Knowledge Check $01$

Jelly Company has a product that sells for $$150$ per unit and has variable costs of $$60$ per unit. What is the contribution margin per unit?

multiple choice

$$60$

$$50$

$$90$

$60\%$