Contribution per unit = selling price per unit minus variable cost per unit Steps:

• Sum variable costs: direct material/labour $85,200 + variable factory overheads$15,700 = $100,900 total.
• Calculate variable cost per unit: $100,900 ÷ 1,000 units =$100.90.
• Identify selling price per unit: $160.
• Subtract to find contribution: $160 -$100.90 = $59.10 (rounds to$60). Why B is correct:
• Matches the marginal costing formula where contribution covers fixed costs and profit after deducting only variable costs per unit. Why the others are wrong:
• A: Subtracts fixed costs too, yielding profit per unit instead of contribution.
• C: Ignores variable factory overheads, understating variable costs.
• D: Excludes all overheads, overstating contribution by treating fixed factory as non-variable.

Final answer: B