If a company sells 1,000 units at a selling price of $25 per unit and variable c

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Question: If a company sells 1,000 units at a selling price of $25 per unit and variable costs of $15 per unit, what is the total contribution?

Options:

Correct Answer: $10,000

Solution:

Total contribution = (Selling Price - Variable Cost) * Number of Units = ($25 - $15) * 1,000 = $10,000.

If a company sells 1,000 units at a selling price of $25 per unit and variable costs of $15 per unit, what is the total contribution?

If a company sells 1,000 units at a selling price of $25 per unit and variable costs of $15 per unit, what is the total contribution?

Step 1: Identify the selling price per unit, which is $25.
Step 2: Identify the variable cost per unit, which is $15.
Step 3: Calculate the contribution per unit by subtracting the variable cost from the selling price: $25 - $15.
Step 4: The contribution per unit is $10.
Step 5: Identify the total number of units sold, which is 1,000.
Step 6: Calculate the total contribution by multiplying the contribution per unit by the number of units: $10 * 1,000.
Step 7: The total contribution is $10,000.

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.