If a company has a contribution margin of $30 and sells 1,000 units, what is the
Practice Questions
Q1
If a company has a contribution margin of $30 and sells 1,000 units, what is the total contribution?
$20,000
$25,000
$30,000
$35,000
Questions & Step-by-Step Solutions
If a company has a contribution margin of $30 and sells 1,000 units, what is the total contribution?
Step 1: Identify the contribution margin per unit, which is given as $30.
Step 2: Identify the number of units sold, which is given as 1,000.
Step 3: Use the formula for total contribution: Total Contribution = Contribution per unit * Number of units.
Step 4: Substitute the values into the formula: Total Contribution = $30 * 1,000.
Step 5: Calculate the total contribution: $30 * 1,000 = $30,000.
Contribution Margin – The contribution margin is the amount per unit that contributes to covering fixed costs and generating profit after variable costs are deducted.
Total Contribution – Total contribution is calculated by multiplying the contribution margin per unit by the total number of units sold.
