Question

Based on a predicted level of production and sales of 19,000 units, a company anticipates total variable costs of $70,300, fixed costs of $32,300, and operating income of $140,600. Based on this information, the budgeted amount of contribution margin for 17,000 units would be:

Answer 1

Answer:

Total Contribution margin= $154,700

Explanation:

Giving the following information:

Based on a predicted level of production and sales of 19,000 units, a company anticipates total variable costs of $70,300, fixed costs of $32,300, and operating income of $140,600.

First, we need to calculate the selling price and unitary variable cost:

Unitary variable cost= 70,300/19,000= $3.7

Sales= Operating income + fixed costs + variable cost

Sales= 140,600 + 32,300 + 70,300= 243,200

Unitary selling price= 243,200/19,000= $12.8

Now, we can calculate the total contribution margin for 17,000 units.

Total Contribution margin= 17,000*(12.8 - 3.7)= $154,700