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Calculation of variable cost and contribution margin

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Amaya Corp. produced 150,000 watches that sold for $24 each during 2006. The company determined that fixed manufacturing cost per unit was $6 per watch. The company reported a $600,000 gross margin on its 2006 financial statements.

Determine the total variable cost, the variable cost per unit, and the total contribution margin.

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Solution describes how to calculate total variable cost, the variable cost per unit, and the total contribution margin by using the data given in the problem.

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