What is the total contribution margin if a company sells 500 units at a selling price of $80 per unit and a variable cost of $50 per unit?
Practice Questions
1 question
Q1
What is the total contribution margin if a company sells 500 units at a selling price of $80 per unit and a variable cost of $50 per unit?
$15,000
$20,000
$25,000
$30,000
Contribution margin per unit = Selling price - Variable cost = $80 - $50 = $30. Total contribution margin = Contribution margin per unit * Number of units sold = $30 * 500 = $15,000.
Questions & Step-by-step Solutions
1 item
Q
Q: What is the total contribution margin if a company sells 500 units at a selling price of $80 per unit and a variable cost of $50 per unit?
Solution: Contribution margin per unit = Selling price - Variable cost = $80 - $50 = $30. Total contribution margin = Contribution margin per unit * Number of units sold = $30 * 500 = $15,000.
Steps: 5
Step 1: Identify the selling price per unit, which is $80.
Step 2: Identify the variable cost per unit, which is $50.
Step 3: Calculate the contribution margin per unit by subtracting the variable cost from the selling price: $80 - $50 = $30.
Step 4: Identify the number of units sold, which is 500.
Step 5: Calculate the total contribution margin by multiplying the contribution margin per unit by the number of units sold: $30 * 500 = $15,000.
