The contribution per unit is price minus the variable cost per unit.

The contribution per unit is price minus the variable cost per unit.

• A. Price
• B. Fixed cost
• C. Variable cost per unit
• D. Total cost

Answer: (A)

Contribution per unit is the amount each unit adds toward covering fixed costs and profit. It’s found by taking the selling price per unit and subtracting the variable cost per unit. For example, if you sell a unit for $100 and the variable cost per unit is $60, the contribution per unit is $40. The price is the revenue per unit, not what remains after variable costs. Fixed cost represents costs that don’t vary with output. Variable cost per unit is the cost to produce one more unit, which reduces the contribution. Total cost combines fixed costs and the total variable costs for the chosen level of production. So the statement describes how to calculate contribution per unit, but none of the options directly names that quantity.

Contribution per unit is the amount each unit adds toward covering fixed costs and profit. It’s found by taking the selling price per unit and subtracting the variable cost per unit. For example, if you sell a unit for $100 and the variable cost per unit is $60, the contribution per unit is $40. The price is the revenue per unit, not what remains after variable costs. Fixed cost represents costs that don’t vary with output. Variable cost per unit is the cost to produce one more unit, which reduces the contribution. Total cost combines fixed costs and the total variable costs for the chosen level of production. So the statement describes how to calculate contribution per unit, but none of the options directly names that quantity.