Question

Tyler Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $127.20 per unit. Sales volume (units) 5,000 6,000 Cost of Sales $419,000 $502,800 Selling and Administrative costs $186,000 $202,200 The best estimate of the total contribution margin when 5,300 units are sold is: Group of answer choices $230,020 $51,410 $146,810 $32,330

Answer 1

Answer:

The correct answer is A.

Explanation:

Giving the following information:

The company sells the product for $127.20 per unit.

Sales volume (units) 5,000 6,000

Cost of Sales $419,000 $502,800

First, we need to determine the unitary variable cost:

unitary variable cost= 419,000/5,000= $83.8

unitary variable cost= 502,800/6,000= $83.8

Now, the unitary contribution margin:

Unitary contribution margin= 127.2 - 83.8= $43.4

Finally, the total contribution margin:

total contribution margin= 5,300*43.4= $230,020