AJ Company

AJ Company is trying to determine the optimal price to charge for its PUNCH model. AJ has fixed costs of $50,000 and the PUNCH has variable costs of $12.00 per unit. AJ has determined that the following relationships exist between price and demand: Price Demand $20 6,875 $19 8,800 $18 10,000 $17 11,000 What is the contribution margin for a price of $20?

Solution Summary

This solution is comprised of a detailed explanation to answer what is the contribution margin for a price of $20.