Problem
Jason Timberwolf owns and operates Timberwolf Industries, a firm that makes very cheap, discounted bowling balls. Here's the essential information on this production operation, and keep in mind that when we use the term "unit" we're referring to each bowling ball produced by Timberwolf:
Sale price per unit $10
Variable costs per unit:
Direct Materials $1
Direct Labor $2
Variable portion of Mfg OH $3
Total variable cost per unit $6
What is the contribution margin (CM) per unit? (Explain and show the calculation)