ACCA MA · Chapter 7 · Question 4 of 11
A product has the following data per unit: selling price $40, direct materials $12, direct labour $8, variable production overhead $3, variable selling cost $2, fixed production overhead $6. What is the contribution per unit?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $15
Explanation
Contribution = selling price - all variable costs = 40 - (12 + 8 + 3 + 2) = $15. Variable selling costs must be deducted (otherwise the answer is $17), and fixed overheads are not deducted when calculating contribution.
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