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If a company sells 1,000 units at a selling price of $50 each and has variable c

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Question: If a company sells 1,000 units at a selling price of $50 each and has variable costs of $30 per unit, what is the total contribution?

Options:

  1. $20,000
  2. $30,000
  3. $50,000
  4. $10,000

Correct Answer: $20,000

Solution: 

Total contribution = (Selling Price - Variable Cost) * Number of Units = ($50 - $30) * 1,000 = $20,000.

If a company sells 1,000 units at a selling price of $50 each and has variable c

Practice Questions

Q1
If a company sells 1,000 units at a selling price of $50 each and has variable costs of $30 per unit, what is the total contribution?
  1. $20,000
  2. $30,000
  3. $50,000
  4. $10,000

Questions & Step-by-Step Solutions

If a company sells 1,000 units at a selling price of $50 each and has variable costs of $30 per unit, what is the total contribution?
  • Step 1: Identify the selling price per unit, which is $50.
  • Step 2: Identify the variable cost per unit, which is $30.
  • Step 3: Calculate the contribution per unit by subtracting the variable cost from the selling price: $50 - $30 = $20.
  • Step 4: Identify the total number of units sold, which is 1,000.
  • Step 5: Calculate the total contribution by multiplying the contribution per unit by the number of units sold: $20 * 1,000 = $20,000.
  • Contribution Margin – The contribution margin is the difference between the selling price per unit and the variable cost per unit, which contributes to covering fixed costs and generating profit.
  • Total Contribution Calculation – Total contribution is calculated by multiplying the contribution margin by the number of units sold.
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