A New Product Is Expected to Sell for $12

question 92

Multiple Choice

A new product is expected to sell for $12. The company would manufacture up to 22,000 units at a variable cost of $5 per unit. Fixed costs would be $150,000. Variable selling and administration expenses would amount to $2.50. Determine the contribution margin per unit and contribution margin rate.

• A) Per unit CM $4.50; CM rate = .375
• B) Per unit CM $5.50; CM rate = .395
• C) Per unit CM $6.50; CM rate = .415
• D) Per unit CM $7.50; CM rate = .435
• E) Per unit CM $8.50; CM rate = .455

---

Definitions:

Evaluate

To calculate or determine the numerical value of an expression or equation.

Evaluate

The process of determining the value of a mathematical expression or equation.

Given

A term used in mathematics and logic to denote something that is assumed to be true or is provided as part of the problem statement.

Simplify

To simplify a mathematical expression or problem to its most basic version.