Younes Inc. manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as P06. Data concerning this product are given below: Per Unit Selling price $ 220 Direct materials $ 38 Direct labor $ 1 Variable manufacturing overhead $ 8 Fixed manufacturing overhead $ 16 Variable selling expense $ 4 Fixed selling and administrative expense $ 16 The above per unit data are based on annual production of 4,000 units of the component. Assume that direct labor is a variable cost. What is the current contribution margin per unit for component P06 based on its selling price of $220 and its annual production of 4,000 units? Multiple Choice $51 per unit $137 per unit $169 per unit $173 per unit

Variable expense per unit = Direct materials per unit + Direct labor per unit + Variable manufacturing overhead per unit + Variable selling expense per unit

= $38 + $1 + $8 + $4

= $51

And, the Selling price per unit is $220

Now put these values to the above formula

So, the contribution margin would equal to

= $220 - $51

= $169 per unit