The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the contribution margin rate.

A) 30%
B) 40%
C) 50%
D) 60%
E) 70%

Contribution Margin

The sales price minus the variable costs of a product, indicating how much selling one more unit adds to profit.

Variable Costs

Costs that vary directly with the level of production or volume of output, such as raw materials and direct labor.

Fixed Costs

Costs that remain constant regardless of the volume of goods or services produced by a business.