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If a company sells 1,000 units at $20 each and has variable costs of $12 per uni
If a company sells 1,000 units at $20 each and has variable costs of $12 per unit, what is the contribution margin?
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Practice Questions
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Q1
If a company sells 1,000 units at $20 each and has variable costs of $12 per unit, what is the contribution margin?
$8,000
$12,000
$20,000
$8
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Contribution margin = (Selling Price - Variable Cost) * Quantity = ($20 - $12) * 1,000 = $8,000.
Questions & Step-by-step Solutions
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Q
Q: If a company sells 1,000 units at $20 each and has variable costs of $12 per unit, what is the contribution margin?
Solution:
Contribution margin = (Selling Price - Variable Cost) * Quantity = ($20 - $12) * 1,000 = $8,000.
Steps: 7
Show Steps
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 result from Step 3 is $8, which is the contribution margin per unit.
Step 5: Identify the total number of units sold, which is 1,000.
Step 6: Calculate the total contribution margin by multiplying the contribution margin per unit by the total number of units sold: $8 * 1,000.
Step 7: The result from Step 6 is $8,000, which is the total contribution margin.
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