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Home / Assignment Help / Suppose a market basket of goods and services costs \$1,000 in the base year and the consumer price index (cpi) is currently 110. this indicates the price of the market basket of goods and services is now:

# Suppose a market basket of goods and services costs \$1,000 in the base year and the consumer price index (cpi) is currently 110. this indicates the price of the market basket of goods and services is now:

The Contribution Margin per unit (CM) can be calculated
from the difference of Selling Price per unit (SP) and Total Expenses per unit
(TE).

First, let’s calculate the value of SP:

SP = Sales / Units sold

SP = \$1,043,400 / 22,200 units sold

SP = \$47

Second, calculate all expenses:

Direct materials per unit = \$234,948 / 27,970 units
manufactured = \$8.4

Direct labor per unit = \$131,459 / 27,970 units
manufactured = \$4.7

Variable manufacturing overhead per unit = \$240,542 / 27,970
units manufactured = \$8.6

Variable selling expenses per unit = \$113,220 / 22,200
units sold = \$5.1

TE = \$26.8

Therefore the CM is:

CM = SP – TE

CM = \$47 – \$26.8

CM = \$20.2 per unit 