If a company has a contribution margin of $15 per unit and sells 2,000 units, wh
Practice Questions
Q1
If a company has a contribution margin of $15 per unit and sells 2,000 units, what is the total contribution?
$30,000
$15,000
$45,000
$60,000
Questions & Step-by-Step Solutions
If a company has a contribution margin of $15 per unit and sells 2,000 units, what is the total contribution?
Step 1: Identify the contribution margin per unit, which is $15.
Step 2: Identify the number of units sold, which is 2,000.
Step 3: Use the formula for total contribution: Total Contribution = Contribution Margin * Quantity.
Step 4: Substitute the values into the formula: Total Contribution = $15 * 2,000.
Step 5: Calculate the total contribution: $15 * 2,000 = $30,000.
Contribution Margin – The amount per unit that contributes to covering fixed costs and generating profit after variable costs are deducted.
Total Contribution – The overall contribution to fixed costs and profit calculated by multiplying the contribution margin by the number of units sold.
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