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Contribution Margins

Herbal remedies sells several products for an average price of $17 per unit. Average variable costs are as follows:

Direct Material $5.00
Direct Labor $1.00
Indirect Manufacturing Costs $0.50
Selling Commission $3.00

EJL's annual fixed costs total $82,500

1. What is the contribution margin per unit?

2. What is the number of units that EJL must sell each year to break even.

3. What is the number of units that EJL must sell annually to make a profit of $75,000.

Please show the calculations for each questions. Thanks.

Solution Preview

Contribution Margins
Herbal remedies sells several products for an average price of $17 per unit. Average variable costs are as follows: 
Direct Material                       $5.00 
Direct Labor                          $1.00 
Indirect Manufacturing Costs $0.50 
Selling ...

Solution Summary

The following helps with problems involving contribution margin per unit and number of units that EJL must sell.

$2.19