If the company sells 3,600 units, its total contribution margin should be closest to:

A) $39,200
B) $5,670
C) $43,200
D) $48,000

Question

If the company sells 3,600 units, its total contribution margin should be closest to:A) $39,200B) $5,670C) $43,200D) $48,000

kayla shank · Accepted Answer

Final Answer : C, Explanation :  We need to use the formula:Contribution Margin = (Price per unit - Variable cost per unit) x Number of units soldGiven:Price per unit = $40Variable cost per unit = $20Number of units sold = 3,600Contribution Margin = (40 - 20) x 3,600Contribution Margin = 20 x 3,600Contribution Margin = $72,000Therefore, the total contribution margin should be closest to $43,200 (option C). Selling price per unit = $88,000 ÷ 4,000 units = $22 per unitVariable expense per unit = $40,000 ÷ 4,000 units = $10 per unitUnit CM = $22 per unit - $10 per unit = $12 per unitContribution margin = $12 per unit × 3,600 units = $43,200

If the company sells 3,600 units, its total contribution margin should be closest to:

A) $39,200
B) $5,670
C) $43,200
D) $48,000

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