Con Ram Industries incurs the following costs during the current year:

Depreciation of machinery $15,000 Direct labor 6,000 Direct materials 4,000 Executive salaries 20,000 Insurance 2,000 Rent on building 8,000 Factory supplies 10,000 Vehicle lease cost 5,000 Sales for the year were $80,000 and Con Ram determined that only the direct production costs and factory supplies are to be classified as variable costs; all other costs are classified as fixed costs.

Con Ram sold 400 units. (a) Calculate the unit contribution margin and the contribution margin ratio for Con Ram Industries. (b) Con Ram Industries is considering plans that would increase the contribution margin ratio for next year. Should it pursue these plans? Explain.