A company expects to sell 1,000 units at a price of $20 each. If the variable co

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Question: A company expects to sell 1,000 units at a price of $20 each. If the variable cost per unit is $12, what is the expected total contribution margin?

Options:

$8,000
$6,000
$4,000
$2,000

Correct Answer: $8,000

Solution:

Total contribution margin = (Selling price - Variable cost) * Number of units = ($20 - $12) * 1,000 = $8,000

A company expects to sell 1,000 units at a price of $20 each. If the variable co

Practice Questions

A company expects to sell 1,000 units at a price of $20 each. If the variable cost per unit is $12, what is the expected total contribution margin?

$8,000
$6,000
$4,000
$2,000

Questions & Step-by-Step Solutions

A company expects to sell 1,000 units at a price of $20 each. If the variable cost per unit is $12, what is the expected total contribution margin?

Step 1: Identify the selling price per unit, which is $20.
Step 2: Identify the variable cost per unit, which is $12.
Step 3: Calculate the contribution margin per unit by subtracting the variable cost from the selling price: $20 - $12.
Step 4: The contribution margin per unit is $8.
Step 5: Identify the total number of units expected to be sold, which is 1,000 units.
Step 6: Calculate the total contribution margin by multiplying the contribution margin per unit by the number of units: $8 * 1,000.
Step 7: The expected total contribution margin is $8,000.

Contribution Margin – The contribution margin is the difference between the selling price per unit and the variable cost per unit, multiplied by the number of units sold.
Variable Costs – Variable costs are costs that change in direct proportion to the number of units produced or sold.
Total Contribution Margin Calculation – The total contribution margin is calculated by subtracting total variable costs from total sales revenue.

A company expects to sell 1,000 units at a price of $20 each. If the variable co

What’s inside this PDF?

A company expects to sell 1,000 units at a price of $20 each. If the variable co

Practice Questions

Questions & Step-by-Step Solutions

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