If a company sells 3,000 units at a selling price of $20 per unit and incurs tot

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What’s inside this PDF?

Question: If a company sells 3,000 units at a selling price of $20 per unit and incurs total variable costs of $30,000, what is the total contribution?

Options:

$30,000
$60,000
$90,000
$20,000

Correct Answer: $60,000

Solution:

Total contribution = (Selling price - Variable cost per unit) x Number of units = ($20 - $10) x 3,000 = $30,000.

If a company sells 3,000 units at a selling price of $20 per unit and incurs tot

Practice Questions

If a company sells 3,000 units at a selling price of $20 per unit and incurs total variable costs of $30,000, what is the total contribution?

$30,000
$60,000
$90,000
$20,000

Questions & Step-by-Step Solutions

If a company sells 3,000 units at a selling price of $20 per unit and incurs total variable costs of $30,000, what is the total contribution?

Step 1: Identify the selling price per unit, which is $20.
Step 2: Identify the total variable costs, which is $30,000.
Step 3: Calculate the variable cost per unit by dividing total variable costs by the number of units sold: $30,000 / 3,000 units = $10 per unit.
Step 4: Calculate the contribution per unit by subtracting the variable cost per unit from the selling price per unit: $20 - $10 = $10.
Step 5: Calculate the total contribution by multiplying the contribution per unit by the number of units sold: $10 x 3,000 units = $30,000.

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 – Understanding how to calculate total variable costs and their impact on contribution margin is crucial.

If a company sells 3,000 units at a selling price of $20 per unit and incurs tot

What’s inside this PDF?

If a company sells 3,000 units at a selling price of $20 per unit and incurs tot

Practice Questions

Questions & Step-by-Step Solutions

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