Asked by Maday Diarte on Jun 03, 2024
Verified
If the company sells 4,500 units, its total contribution margin should be closest to:
A) $85,500
B) $24,652
C) $87,400
D) $81,600
Total Contribution Margin
The difference between total sales revenue and total variable costs, indicating the amount available to cover fixed expenses and generate profit.
- Familiarize oneself with the calculation methods and the significant aspects of the contribution margin and contribution margin ratio.
Verified Answer
MS
Maria Sola Gratcia BanjarnahorJun 10, 2024
Final Answer :
A
Explanation :
Selling price per unit = $266,800 ÷ 4,600 units = $58 per unit
Variable expense per unit = $179,400 ÷ 4,600 units = $39 per unit
Unit CM = $58 per unit - $39 per unit = $19 per unit
Contribution margin = $19 per unit × 4,500 units =$85,500
Variable expense per unit = $179,400 ÷ 4,600 units = $39 per unit
Unit CM = $58 per unit - $39 per unit = $19 per unit
Contribution margin = $19 per unit × 4,500 units =$85,500
Learning Objectives
- Familiarize oneself with the calculation methods and the significant aspects of the contribution margin and contribution margin ratio.
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