Question
A company sells a unit for ₹20. Its fixed cost is
₹10,000, and the variable cost per unit is ₹10. What is the contribution per unit?Solution
Contribution per unit is calculated as Selling Price – Variable Cost. Here, Contribution per unit = ₹20 - ₹10 = ₹10. This metric helps determine the portion of sales revenue that contributes to covering fixed costs and generating profit.
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