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If a company has a contribution margin of $25 per unit and sells 1,200 units, wh

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Question: If a company has a contribution margin of $25 per unit and sells 1,200 units, what is the total contribution?

Options:

  1. $30,000
  2. $25,000
  3. $20,000
  4. $15,000

Correct Answer: $30,000

Solution: 

Total Contribution = Contribution Margin per Unit * Number of Units = $25 * 1,200 = $30,000.

If a company has a contribution margin of $25 per unit and sells 1,200 units, wh

Practice Questions

Q1
If a company has a contribution margin of $25 per unit and sells 1,200 units, what is the total contribution?
  1. $30,000
  2. $25,000
  3. $20,000
  4. $15,000

Questions & Step-by-Step Solutions

If a company has a contribution margin of $25 per unit and sells 1,200 units, what is the total contribution?
  • Step 1: Identify the contribution margin per unit, which is given as $25.
  • Step 2: Identify the number of units sold, which is given as 1,200.
  • Step 3: Use the formula for total contribution: Total Contribution = Contribution Margin per Unit * Number of Units.
  • Step 4: Substitute the values into the formula: Total Contribution = $25 * 1,200.
  • Step 5: Calculate the total contribution: $25 * 1,200 = $30,000.
  • Contribution Margin – The contribution margin is the amount per unit that contributes to covering fixed costs and generating profit after variable costs have been deducted.
  • Total Contribution Calculation – Total contribution is calculated by multiplying the contribution margin per unit by the total number of units sold.
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