To illustrate the contribution margin ratio, we will assume that a company manufactures and sells a single product and has the following facts:
- selling price per unit of $20
- fixed manufacturing costs per month of $18,000
- variable manufacturing costs per unit of $4
- fixed SG&A expenses per month of $12,000
- variable SG&A expenses per unit of $2
- fixed interest expense per month of $1,000
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