At a volume of 20,000 units, Almount Industries reported sales revenues of $1,000,000, variable costs of $300,000, and fixed costs of $260,000. The company's contribution margin per unit is:

Contribution margin per unit = $35 per unit

Explanation:

The contribution margin per unit is the contribution or amount provided by the sale of each unit towards covering the fixed costs of the business. The total contribution margin is calculated by subtracting the total variable costs by the sales revenue. The contribution margin per unit can be calculated by dividing the total contribution by the number of units.

Total Contribution = Sales Revenue - Variable costs

Contribution margin per unit =  Total Contribution / Number of units

Total Contribution = 1000000 - 300000

Total Contribution = $700000

Contribution margin per unit = 700000 / 20000

Contribution margin per unit = $35 per unit

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